Despite hurdles, govt to go ahead with auction of six blocks: CoalMin

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The government’s efforts to auction about six explored blocks to the private sector power, steel and cement producers within this financial year may not fructify as the environment ministry, department of industrial policy and promotion (DIPP) and the petroleum ministry have opposed certain provisions of the competitive bidding process.

However, the coal ministry says that the six explored blocks, with an estimated reserves of 2 billion tonnes, is likely to be auctioned by March. On Monday coal secretary Sanjay Kumar Srivastava said that the government intends to execute auctioning of “substantial number of blocks” to tide over coal shortage. The fuel’s demand-supply gap is likely to be around 146 million tonnes within two years.

The coal ministry had recently awarded 14 coal blocks to Central and state utilities, having reserves of 159 million tonnes which can generate 30,000-35,000 MW of electricity. The Cabinet has already approved the methodology for auctioning coal blocks, providing for upfront and production-linked payments and fixing coal sale prices. The mechanism provides for a production-linked payment on a rupee-per-tonne basis, plus a basic upfront payment of 10 per cent of the coal block’s intrinsic value. To begin, the government has decided to auction only explored blocks, but is yet to fix the floor price. This also implies that it would have to auction six explored mines as has been planned till now instead of ten being contemplated.

The additional four mines cannot be auctioned as the Central Mine Planning and Design Institute, the mine planning and consultancy company of Coal India, is unlikely to submit its assessment report about these mines before next year.

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