India’s first-ever auction to commercially mine and sell coal has received 82 bids from 46 companies in the technical round. Well-known names like Adani Mining, Essel Mining, and Hindalco, as well as several new entrants -- mostly from the MSME sector and non-coal industries -- put in their bids. Among the new entrants, Andhra Mineral Development Corporation has expressed an interest for two mines.
The bids were received for 23 coal blocks, out of the 38 that were offered by the Ministry of Coal for the first commercial coal auction. For 20 blocks, there were more than two bidders.
According to senior ministry officials, this is the highest number of bids received at technical round level in a coal auction. “The earlier rounds of auction of coal blocks for captive (self) usage also never received this much high interest in a single round. This reinstates the confidence of India Inc in this transparent process of awarding coal blocks,” said an official.
The auction will happen in two rounds: technical and financial. The nominated authority for the coal auctions — a joint secretary-level official from the coal ministry — will evaluate the technical bids. In the technical round, the bidders were required to submit their eligibility criteria, along with an initial offer to the nominated authority. These will be opened on Wednesday and the eligible ones will participate in the second round.
According to the tender document for commercial coal mining, there is effectively no strict eligibility criterion for participating in the auction. The companies/joint ventures should be registered in India. However, last month, the Centre decided to restrict the entry of neighbouring countries, including China, in the auction.
The second round for financial bids comprises two stages. The initial offers of technically qualified bidders are ranked in the descending order for determining the qualified bidders. These bidders are eligible to participate in an e-auction and submit their final offer. The e-auction will be conducted on the commerce platform of MSTC Ltd, which will commence in October and final winners will be declared in November.
The highest bidder for a mine selected for evaluation by the government will be declared a ‘successful bidder’. The tender document, however, mentioned the nominated authority “reserves the right (without incurring any liability whatsoever) to reject all or any of the bidders/bids without assigning any reason whatsoever”. One bid per company for a mine is allowed.
The Centre started the coal mine auction — for commercial mining and sale by private companies — in June. Bidding terms were liberalised to attract foreign players, non-mining entities, and large miners. It amended the Coal Mines Special Provisions Act, 2015, in May to simplify the auction process and attract significant investor interest.
Mine-bearing states Jharkhand and Chhattisgarh had protested against the timing of the auction, citing the Covid-19 pandemic. Jharkhand has also moved court against the Centre’s decision to hold commercial coal auction during Covid-19. The state said bids would be subdued and would hurt revenues to the states.
The coal ministry also replaced five mines from the list of mines to be auctioned after Chhattisgarh said they fell in the eco-sensitive zone near the Hasdeo river. It added three mines from the same state, taking the total of mines on offer to 38, from 41 earlier.
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