New Delhi, Sept. 15: Coal block auction, hanging fire because of the environment ministry’s refusal to ensure approval, will take place in December-January.
Following inter-ministerial meetings, the environment ministry has agreed to give letters of comfort to the bidders.
Successful bidders will be allowed to exit the project if all the clearances are not available within two years of the auction.
The coal ministry has circulated a note to all the ministries on the auction of around 22 blocks with suggestion on alternative pricing strategies.
The suggestions have been given by Crisil, which was appointed by the government to suggest the methodology for fixing the floor price/reserve price. Crisil has also produced a model tender document and a draft agreement to be entered by the government with the successful bidders”.
Officials said the bids might be based on production sharing because of the environment ministry’s reluctance to give any assurance on clearances beyond the letters of comfort. This implies that the bidders will decide the quantity of coal they will give as revenue share.
The profit sharing method for gas exploration has been criticised on the ground that the companies often show higher costs and lower profit.
Under consideration is a clause asking bidders to provide upfront 10 per cent of the value of mine reserves, to discourage non-serious bidders. The mine value will be calculated at a discount to the five-year average global price of coal. Bidders or the bidding consortium, which can include foreign investors, will need to have a minimum net worth and mining experience to participate in the auctions.
The Centre will put in place a minimum work programme to ensure that the winning bidders do not squat on the mines. Miners will have to complete a certain amount of work within a stipulated time frame.
The Mines and Minerals (Development and Regulation) Act, 1957, was amended in September 2010 to allow the auction of coal blocks. India has identified around 54 blocks with 18 billion tonnes of reserves.
The rules for auction through competitive bidding were notified earlier this year.
Meanwhile, the B.K. Chaturvedi-headed panel looking into the possibility of utilisation of surplus coal from captive mines is expected to submit its report in about a month. “We had held a meeting. We have asked for some legal advice. Based on that the next meeting will be held. The report will take a month more to be out. It will take time,” Chaturvedi, a Planning Commission member, said.