Centre offers five lignite blocks for allocation under auction route

Written by Indronil Roychowdhury | Kolkata | Updated: Aug 1 2013, 02:20am hrs
Despite being under pressure from a parliamentary panel to auction coal blocks, the government has again offered five lignite blocks for allocation under Auction by Competitive Bidding of Coal Mines Rules, 12.

The offer has been made for the second tranche of allocation to government-owned companies, after the government allotted 14 blocks to government-owned power PSUs earlier this month.

The blocks, with nearly 156 million tonne of reserves, have been offered to state-owned companies of Gujarat and Rajasthan only. While three blocks would be allotted for commercial mining, one would be allotted for power production and one for underground coal gasification.

Of the five blocks, four are in Gujarat and one in Rajasthan, with Vastan in Gujarat being the biggest (estimated reserves of 107 mt). It has been offered for underground coal gasification.

A coal ministry official told fe that applications have been invited from state-owned companies of Gujarat and Rajasthan, and selection would start after August 30.

Kalyan Banerjee, chairman of the Standing Committee on coal and steel, said the government was taking longer than usual to start coal block auctions for captive use through competitive bidding although the Mines and Minerals (Development & Regulation) Amendment Act, 2010, has been passed by Parliament.

Auction by Competitive Bidding of Coal Mines Rules, 12 was done mainly to introduce the system of auctioning coal blocks, but the government continues to go with the allocation process, Banerjee said, adding that the parliamentary panel has already tabled a report in Parliament criticising the government for undue delays.

A coal ministry official said that although there were provisions in the competitive bidding route to allocate blocks to government companies for specific use, the government should have given priority to auction over allocation.

The process of auction has been delayed mainly due to Crisils recommendation of offering blocks only after full exploration and obtainment of the geological report. The process of obtaining geological report was started in January this year.

Crisil was engaged mainly to determine the floor price of such blocks. But without any geological data, it could not determine any floor price. Companies such as Tata Steel were against auctions. Tata Steel managing director HM Nerurkar has been insisting on determining reserves and coal quality before auctioning a block.

What would a bidder pay for if he doesnt know how much coal is there inside and what type of coal it is, Nerurkar had told FE.

However, as a preparatory measure, the coal ministry has asked the forest ministry to comment on bounding geographical coordinates, which helps in data-based index scan. The government plans to offer 12 blocks for the first round of auction, the reserves and geological plans of which have already been obtained, a ministry official said.

The government preferred to first start the process of allotting to PSUs under the Auction by Bidding Coal Mines Rules, 12, and invited proposals from PSUs in December 2012. The blocks (14) were finally allotted at the beginning of this month.

The allocation of lignite blocks is unlikely to take a lot of time as the government has expedited the process. The offer for auction is expected to follow the allocation of lignite blocks, the ministry official said.