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Consortia approach to coal block allocation

Calcutta, June 17: The ministry of coal may allocate blocks for captive use to consortia of companies instead of individual applicants.

“The ministry has received 736 applications for the 20 new blocks it is offering for captive coal production. The ministry is getting two to three applications for captive coal blocks every week,” said P.R. Mandal, adviser to the coal ministry.

“However, the number of applications are far too many compared with the blocks earmarked for allocation. As a result, the ministry is planning to allocate coal blocks to consortia of companies under a legally tenable agreement, said Mandal. He was speaking at a two-day seminar on India’s energy security organised by the alumni association of Indian School of Mines.

“The ministry will take a decision on the modalities of distributing coal blocks to companies in a meeting on June 23,” he added.

According to Mandal, the consortia of companies will be formed by clubbing the requirements of applicants. Each consortium may have one or more leader companies which would develop and mine the coal themselves or give it to others and transfer coal to member companies of the consortium at a price that would be determined by the government at a later date.

The government has allowed 100 per cent foreign direct investment in captive coal production for power sector companies, while iron and steel and cement manufacturers can go in for a 26:74 joint venture with foreign partners in mining coal for captive use.

The coal ministry has also decided to offer more blocks for captive mining. “The government has identified 148 blocks for captive mining,” Mandal said. However, he added that the ministry would follow a more vigilant policy while allocating coal blocks for captive use in order to reduce leakage and increase productivity.

Since 1993, when the government gave the first licence for captive coal production in the country, 97 blocks have been allocated out of 99 identified with proved coal reserves. “Among these, 56 are with private sector companies and 41 are with public sector units and other state sector companies. However, 43 were allocated four to five years ago and production has started at eight blocks only,” Mandal said.

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