Cabinet to mull coal block auction policy today
24 Sep 2013
The government is likely to consider the auction policy for coal blocks for private steel, cement and power companies today.
The policy, if cleared, will pave way for allotment of coalmines through competitive bidding for the first time, says a report in The Economic Times.
The cabinet committee on economic affairs (CCEA) will take up the policy and if approved the government will auction at least four coal blocks with nearly 2,000 million tonnes of estimates reserves before December, the report cited an unnamed senior coal ministry official as saying.
"The CCEA will take a call on critical issues like pricing of the coal blocks, issue of an in-principal environment and forest clearance, and discount to power firm," the official said.
The government has decided to auction only explored coalmines with known reserves. The environment ministry has also asked the coal ministry to bid only coal blocks that are not in ecologically sensitive ''inviolate'' areas like dense forest, wildlife sanctuaries, tiger reserves and elephant corridors.
The environment ministry will issue a 'comfort letter' to each coal block that gives provisional green clearance but does not guarantee it.
The coal ministry proposes to allocate coal blocks on a model that is similar to royalty payment by coal miners.
The model is a safe bet for the government, as revenue sharing will be done on actual production of coal and will not require estimating reserves, unlike in the earlier proposed profit-sharing proposal.
Under the draft proposal, the qualified companies will be penalised if they surrender blocks without performing detailed exploration, purchasing geological report and submitting mine plan. The firms will also have to obtain mining lease from state governments if they bag explored blocks with known reserves.
The ministry also proposes to fix a floor price for auction to steel and cement companies, below which bids will not be accepted.
Power and state-run firms will pay a one-time 'reserve price' that could be 10 per cent of the estimated reserves in the block valued at cost of mining of an equivalent grade in international markets.
The government recently allocated 14 coal blocks to state-run power companies including the National Thermal Power Corp (NTPC) and Neyveli Lignite Corp to cater for 31,800 MW of power generation capacity envisaged to be set up at an investment of Rs1,60,000 crore.
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