The government on Monday announced it had initiated a process of coal block allocation under a new policy, nine months after alleged irregularities in allocation created a nationwide stir.
The coal ministry has put 17 acreages of the commodity, with combined geological reserves of 8.5 billion tonnes (bt), on the block.
In the first round of the bidding — under the Auction by Competitive Bidding of Coal Mines Rules notified in February — 17 blocks will be allocated to government companies. This includes 14 blocks with reserves of 8.2 bt for companies setting up end-use plants in the power and steel sectors and three blocks earmarked for allocation to mining companies. The companies have been asked to apply by January 30.
| IN BLACK & WHITE Details of 17 blocks to be bid out to govt companies | ||
| Coalfield | Coal block | Reserves (mn tonnes) |
| FOR END-USE IN POWER AND STEEL | ||
| Mand Raigarh | Jilga Barpali | 545.70 |
| Brahmani | Kalyanpur-Badalpara | 102.30 |
| Singrauli | Gand Bahera-Ujheni | 532.00 |
| Talcher | Kudanali-Laburi | 396.10 |
| Talcher | Sarapal-Nuapara | 701.10 |
| Talcher | Tentuloi | 1234.30 |
| Rajmahal | Pachwara South | 279.00 |
| Kamptee | Mahajanvadi | 340.00 |
| Talcher | Chandrabila | 550.00 |
| Mand Raigarh | Baisi | 150.00 |
| Birbhum | Deocha Pachami, Dewanganj Harinsingha | 2064.20 |
| Mand Raigarh | Banai | 628.70 |
| Mand raigarh | Bhalumuda | 550.00 |
| Hasdeo Arand | Kente Extn | 200.00 |
| FOR MINING | ||
| Talcher | Brahmani | 58.90 |
| Auranga | Gowa | 51.40 |
| Korba | Kerwa | 112.90 |
| TOTAL | 8496.60 | |
| Source: Coal Ministry | ||
“The applications received will be evaluated on the prescribed criteria in consultation with the respective state government and central ministries,” read the ministry’s notice inviting the applications.
The ministry had last week published the selection criteria based on a 30-point system assigning the highest nine points for “preparedness of the plant”. This includes evaluating whether in-principle approval has been obtained for the project, land acquisition, water allocation and approval of terms of reference of the project by the environment ministry.
The next evaluation criteria is “demand and supply gap of the state” during the 12th and the 13th Plan periods. This implies that companies setting up projects in states with higher coal shortage are more likely to be allocated reserves. Nine points have been assigned for this criteria.
Further, six points have been assigned for the criteria “company’s financials”.
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This includes four points for net worth and two points for turnover of the company.
Three points have been assigned for the progress of development of blocks allotted in the past to the applicant company. The last three points have been kept for location of the plant – pithead plant or those located within a distance of 100 km from the block will be given priority.
The procedure for allocation says the central government will identify coal-bearing areas and earmark these for specified end-use or mining.
This will be followed by fixing a reserve price for each block. Applications will be invited from central and state-owned companies. The applications, along with the information on status of plant and financial details furnished by companies, will be evaluated on the 30-point system by a committee headed by the coal secretary and comprising representatives of other ministries. Finally, the selected company will be given the block.
The government did not provide details of the reserve prices for the 17 blocks set to go under the hammer in its notification. Private consultant CRISIL, appointed earlier for determining the methodology for fixing the reserve price and floor price, had recommended linking valuation of coal reserves to international prices in its report on coal block auctioning.
In case of mining companies, mined coal will be further distributed to end-use projects through long-term agreements on the lines of coal linkages. In case such coal are supplied to a power company, the power company will have to enter into long-term power off-take arrangements. Also, the selected mining company will be free to sell upto 90 per cent of its production through the notified price (through linkage) and 10 per cent through e-auction. The mining company will be barred from entering into production joint ventures with private firms.
In case of companies seeking blocks for end-use projects, the mined coal will have to be mandatorily used for captive purposes. Overall, the government had planned to allocate 58 blocks through competitive bidding. Applications would soon be invited for the rest 41 blocks by the ministry.