The government on Wednesday decided to cancel the fourth tranche of coal block auction citing lack of demand from companies in the non-regulated sectors like steel, aluminium and cement. The government will assess the demand situation and decide on the schedule of next round of bidding.
The coal ministry had shortlisted eight mines for this round of auction with a combined peak production capacity of nearly 13 million tonnes per annum. The auction was scheduled to begin on January 18.
“The government has decided to annul the auction after 7 out of eight mines recieved less than three bids,” coal secreatry Anil Swarup said. According to coal block auction rules, a block needs at least 3 qualified candidates for the auction process to progress to next stage.
Swarup said that the tepid demand from the non-regulated sector may be the result of subdued growth in the related sectors and availability of domestic coal at cheaper rates. He added that the poor financial health of companies in the eligible sectors could have also played a part in low interest and participation.
The average rate of coal at e-auction this fiscal year has been markedly down compared to last year owing to spurt in supply which suggests cheaper coal is available to industry, Swarup said.