Potential private investors have raised certain concerns on the eligibility criteria and revenue sharing models.
Potential private investors have raised certain concerns on the eligibility criteria and revenue sharing models proposed for the much-anticipated auction for commercial coal mining. In a meeting with the coal ministry, some stakeholders argued that linking the revenue share with the prices of coal charged by Coal India (CIL) might not be a desirable proposition. They said that doing so would not serve the purpose of making coal cheaper as CIL prices are already on the higher side. Also, as CIL’s notified price varies across sectors, it was brought to notice that a standard CIL notified price should be considered for estimating revenue share.
The ministry had originally proposed that though commercial miners would have full flexibility to decide its pricing and selling strategy, the revenue sharing will be calculated on the basis of actual revenue or actual production multiplied by 1.2 times the CIL price. The meeting was chaired by two joint secretaries of the ministry. Participants included representatives from power companies such as Jindal Steel & Power, Adani Enterprises, JSW Energy, Lanco Infratech and GMR.
Some stakeholders said that mine development experience should also be an eligibility criteria to participate in the auctions. The claim was made on the basis that the successful bidders would also have to undertake activities such as land acquisition and procuring necessary clearances, which warrant development expertise. The initial proposal had said that experienced miners, with net worth of more than `1,500 crore, would be eligible to participate in the auctions. Some stakeholders also said that the net worth requirement should be reduced to ensure more parties participate in the auction.
To attract the interests of foreign players, the mines earmarked for commercial mining would be large in size, with peak capacity of around 30 MT per annum. It was clarified in the meeting that blocks which might harm forest areas shall not be put up for auction. The successful bidder will have to procure the necessary environmental clearances.