The Narendra Modi government, after successfully bidding out 28 captive coal blocks cancelled by the Supreme Court, targets to auction another 10 mines with over 350 million tonne of reserves to unregulated sectors such as steel and cement, coal secretary Anil Swarup said on Thursday. The blocks are situated in Maharashtra, Jharkhand, Chhattisgarh and Odisha.
“The notice will be issued on June 8. Bid due dates i.e submission of documents is July 21,” said Swarup, adding that online bidding would take place between August 11 and 17.
The government will issue the tenders inviting technical and financial bids for the mines from June 8, and the last date for submission of documents will be July 21.
FE earlier reported on the government’s plan to auction coal blocks for steel and cement plants, considering a huge demand supply gap for coal.
Of the 10 blocks, most have requisite approvals. Five were offered to private companies in the first two rounds of auction, but were later withdrawn as they received less than three bids.
The government is also considering auction of coal supply from Coal India to unregulated sectors, including cement and steel, for five years, Swarup said.
As per the proposed mechanism, Coal India will invite bids from companies for supplying a fixed quantity of coal at a floor price. Once bids are received, the state-run miner will increase the floor price till demand and supply reach the same level.
“Apart from the announcement of the third round of auction of coal mines for non-regulated sectors, the most significant development today is the government announcing auction of coal linkages from Coal India for these sectors. The government’s argument is that since the price of the final product in these sectors is determined by market forces, the input cost should also be market determined,” said Debasish Mishra, senior director, Deloitte in India.
The proposed procedure will be circulated for stakeholder’s comments shortly. The secretary said the coal ministry will assess the surplus coal in hand after meeting Coal India’s prior commitments. He said Coal India output in the first two months of the financial year has been 11.8%.
The ministry is also considering extending coal supply agreements for existing holders by a year till June 30, 2016. After that, existing holders will have to bid for coal supply.
So far, 29 blocks have been auctioned and another 38 allotted to state-owned entities. “Out of 67 blocks auctioned or allotted, a total benefit of Rs 3,35,000 crore is for states and another Rs 69,000 crore will be unlocked by way of tariff benefit to consumers,” Swarup had said earlier.
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