India’s Coal Ministry extends timelines for ongoing coal block auction
India’s Coal Ministry has extended the timelines for various stages of auctioning 18 coal blocks that got underway on Wednesday and has also relaxed some terms and conditions for successful bidders.
The auction of the coal blocks for users in steel, cement and captive power generation sectors started on December 19, and the Coal Ministry on the very day extended the last date for submission of technical bids until January 2, while price bids for the assets will be held between January 14 and 27.
The most significant element of the latest round of coal block auction is the new rule incorporated by the Coal Ministry which will enable successful bidders free merchant sale for up to 25% of production from each block.
The freedom to part sell production from a captive mine is the government’s half measure toward reforming the coal sector, after putting on the backburner plans to fully open up commercial coal mining for private miners.
The 18 coal blocks at peak aggregate capacity utilisation will yield 32-million tons a year, resulting in a maximum of eight-million tons a year of free coal sale flowing into the shortage-hit dry fuel domestic market.
In another relaxation of auction rules to woo potential bidders, the Coal Ministry has extended the time period of bringing each block into production to five years, from four years stipulated in previous auction rules.
The Ministry’s official reason for extending the timelines of the auction process is that it is in response to several requests from various interested bidders. However, unofficially a section of the officials maintain that the extension of timelines could also have been a response to apprehensions of tepid response from investors.
It was pointed out that some of the coal blocks on offer in the current tranche were the same blocks which had been put up for auction last August, but the Ministry had to call of the bidding process following poor response from investors.
Source: Mining Weekly