Govt to allot,auction 101 mines in 1st lot; approach paper out

Gearing up for fresh allocation of coal blocks cancelled by the Supreme Court, government today came out with a bidding mechanism for auction of 65 mines to private players while 36 other blocks will be directly allotted to state-owned companies.
While the number of coal mines to be auctioned or allotted in the first tranche has been increased to 101 from 92, there would also be different criteria for auction to regulated sector, including power, and unregulated sectors.
Of the 101 blocks to be alloted and auctioned in the first lot, 63 mines would be given to the power sector, while the rest would be for sectors like steel and cement.

As per the list of coal mines earmarked for auction, 28 mines will be auctioned to the power sector.
The auction for regulated category will be reverse bidding, the government said in draft approach paper on which comments stakeholders have invited till December 22.
A ceiling price will be fixed for coal mines to be auctioned to the power companies having power purchase agreements based on the prevailing Coal India notified price.

"A ceiling price of the prevailing CIL notified price for each coal mine will be fixed and the bidder will be mandated to quote lower than this ceiling price," the approach paper said.

Besides, "a fixed reserve price of Rs 100 per tonne of coal shall be payable as per actual production by the mine allottee".
For power plants having uncontracted capacity, the bidder shall be restricted to cap its "merchant capacity at 20 per cent of the installed power capacity linked to the alloted coal mine... The reserve price in such cases shall not (be) less than Rs 150 per tonne," it added.
If an allocatee mines excess coal than annual requirement, it will be sold to Coal India at the bid price or at prevailing Coal India notified price for such grades.

For unregulated sector like steel, sponge iron, cement and captive power, a floor price of Rs 150 a tonne has been fixed for forward bidding.
"The intrinsic Value of the coal block will be calculated by computing its Net Present Value, based on the Discounted Cash Flow method. 10 per cent of the Intrinsic Value will be payable upfront."
The government had last week finalised rules for auction or allotment of 204 coal mines that were de-allocated by the Supreme Court. In September, the apex court had termed the allocation of 204 mines since 1993 as "arbitrary and illegal".
The Lok Sabha had last week passed a Bill which provides for fresh auction blocks.

The government has also constituted an inter-ministerial panel to examine the draft approach paper.