The much-awaited e-auction of 74 coal blocks, 42 of which are currently producing coal and the remaining 32 are on the verge of production, will take place on February 11, 2015, while the Government aims to announce the final award of the reserves by March 16, 2015. At the same time it will ensure that power tariffs don’t go up post the bidding process. Only entities having end-use projects in power, steel and cement sectors will participate in the exercise.
The Pioneer had first reported on November 17, 2014 that the e-auction of coal blocks could be held in February 2015 and also elaborately explained the methodology which the Government has worked upon for determining the floor price of the blocks which are to be put up for auction.The Coal Ministry on Wednesday released the draft guidelines for allocation of the 74 blocks, on which it has sought comments from concerned stakeholders by November 24. The guidelines were drafted after the Government on October 21 promulgated an Ordinance for enabling e-auction of coal blocks.
The Government plans to auction 74 coal blocks in all. Out of these, 42 are currently under production and the Supreme Court (SC) had allowed continuation of their operations till March 31, 2015.The remaining 32 are on the verge of producing coal. Request for Proposal for these will be issued on December 22. The 42 mines currently produce about 90 million tonnes a year of coal and the remaining 32 ready-to-produce mines have potential for producing another 120 million tonnes.
Successful bidders, besides paying the winning price for the coal block, will also pay a fair value for the plant and equipment already installed at these mines. Existing operators of these mines will get a fair value of their investment.The floor price of the blocks which would be put out for bidding will be determined before December 22 and the methodology of arriving at the floor price will be sent for Cabinet approval soon.
“The bidding due date would be around February 11, 2015. We hope to finalise the technical bid qualification by March 3. The auction will get moving on March 6 and we hope that by March 16, we should be able to issue a vesting order,” Coal Secretary Anil Swarup said while explaining the timeline for the entire process to reporters.
At the same time, he expressed the hope that the response to the e-auction exercise would be enthusiastic and robust.The proposed rules also allow limited swapping by an entity for the same end-use for a plant which may be situated elsewhere, though the end-use has to be same. The Pioneer had first reported about this aspect being present in the Ordinance, last week.
The Centre plans to hold the e-auction in two stages under the Coal Mines (Special Provisions) Rules. The bidding will be conducted for only those entities which are involved in specified end-use projects of power, steel and cement sectors. However Swarup said that the Government is keen that power tariffs don’t go up due to the entire bidding exercise.
“We are in the process of evolving a system, which has not been finalised yet. It is not a revenue maximising process. It is essential to keep a lid on tariffs,” Swarup said.For wholly-owned public sector undertaking companies, the Secretary said that the coal blocks will be allotted to them directly. State-owned entities involved in end-use projects of power, steel and cement sectors will be identified by the Government on the basis of the urgency of their requirement of coal blocks, and these will then be allotted the reserves accordingly. The State-owned entities though can participate in the auction process also, Swarup informed.
He, at the same time, cautioned that there will be a robust performance monitoring mechanism in place to ensure that the successful bidders develop the blocks on time. There is a performance bank guarantee provision also to ensure that the blocks don’t miss their development deadlines, the Secretary said.
There would be two broad categories in these 74 blocks. One category will relate to such mines which will be put to auction and the other will relate to such blocks which will be allotted to the State or State entities.“One set of blocks would be put for auction where even State entities can participate. The second set of blocks will be for allotment for State entities where again end-use has to be clearly specified,” Swarup said.
He added that each of the entities which go in for auction will have to furnish an additional levy of Rs 295 per tonne by December this year, as has been mandated by the SC.
Explaining the draft guidelines which were placed on the Coal Ministry’s website, Swarup repeatedly emphasised that the e-auction route has been earmarked to ensure complete transparency in the entire process, and the Government hoped that the rules will impart a sense of certainty to the business environment and provide clarity to all stakeholders.
As per the draft rules of bidding for the first set of coal blocks from among the 204 whose allocations were cancelled by the SC in September this year, the mines will be allocated only for specified end-use and there will be a cap on number of blocks a company can bid for.
The Secretary also said that though a company can bid for more than one block, it cannot monopolise the blocks and to prevent this kind of a situation, there will be a cap on the number of blocks a company can bid for.The e-auction of the coal blocks will take place on February 11, 2015, while the Government aims to announce the final award of the reserves by March 16, 2015 Only entities having end-use projects in power, steel and cement sectors will participate in the exercise
The Coal Ministry on Wednesday released the draft guidelines for allocation of the 74 blocks, on which it has sought comments from concerned stakeholders by November 24 Successful bidders, besides paying the winning price for the coal block, will also pay a fair value for the plant and equipment already installed at these mines The coal blocks will be allotted directly to wholly-owned public sector undertaking companies