India: Coal block auctions to kick off by June
Wednesday, 28 March 2012 | 00:00
The government is gearing up to hold the first round of coal block auctions in the second quarter of 2012. This will throw
up 50 coal blocks for grabs immediately, Union coal minister Sriprakash Jaiswal was quoted as saying by news agencies.
On March 22, TOI had front-paged a draft report of the Comptroller and Auditor General which stated that public and private commercial entities had reaped windfall gains of Rs 10.67 lakh crore because the government distributed 155 coal blocks to them without auction.
The coal ministry has now called for bids from consultants to devise a methodology to fix the floor price of the blocks to be auctioned.
On February 2, the coal ministry had notified rules for auction by competitive bidding and last week asked for applications from domestic as well as international service providers to set up a bid management system for the auction process. The bids will be opened on April 17.
Several agencies had called for a process of competitive bids through a transparent auction for handing over natural resources. The Central Mine Planning and Design Institute, under the aegis of the coal ministry, will rope in consultants by mid-April. They will also help the government structure a tender document for the selection of successful bidders, and the model agreement between the government and the successful bidder.
"The coal ministry intends to offer captive coal blocks through the bidding route for captive mining of coal for permitted end-use like steel, power and cement sectors notified by the government," said the notice inviting tenders for selection of service providers. The hiring of consultants will end by April and based upon their advice, the government may call first bids by the end of June this year. In a gazette notification, the government had notified the rules for auction of coal mines through a competitive bidding process called the Auction by Competitive Bidding of Coal Mines Rules 2012.
As per this notification, separate bids would be called for government, non-government firms and power projects won through competitive bids.
"The modalities of the auction process are yet to be seen. However, it is expected to draw significant interests from private cement, steel and power firms, besides state-owned SAIL, NTPC and state-utility firms due to non-availability of coal and massive expansion in India's steel, cement and power capacities. It will provide an alternative to costly coal imports," said an industry analyst, adding that it is not yet clear how Coal India will get its blocks once the auction process is initiated.
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