Bids for coal block auctions put off

Govt has invited applications for 20 coal and eight lignite blocks for captive mining.

The coal ministry has deferred introducing competitive bidding for the auction of coal blocks and has invited applications for 20 coal and eight lignite blocks for captive mining.

Coal ministry officials told Business Standard that the applications would be processed through the screening committee route which was currently being followed.

"The government has not given up the idea of competitive bidding, but it is felt that the current installment of blocks should be awarded through the screening committee route," said an official.

He added that the Prime Minister's Office favoured introducing competitive bidding, but the decision to defer it was taken after the opposition from power companies.

It was felt that there were only a few explored blocks available for competitive bidding, as out of 136 coal blocks about 87 had been allotted to power, iron and steel, and cement companies for captive use. Some of the remaining blocks were not very attractive, said an official.

Another reason for deferring competitive bidding was that it would require amendment to the Coal Mines (Nationalisation) Act. Amendments to the Act might be opposed by some sections, officials said.

The coal ministry has set October 31 as the last date for submitting applications for 28 blocks with over 2,395 million tonnes of coal and 816.37 mt of lignite reserves in Jharkhand, Andhra Pradesh, Madhya Pradesh, Maharashtra, West Bengal, Tamil Nadu, Rajasthan and Jammu & Kashmir.

The applications will then be examined by a screening committee under the chairmanship of secretary of coal ministry and comprising representatives from ministries of railways, power and steel, department of industrial policy & promotion, concerned state governments and representatives of coal companies.

The process for introducing competitive bidding had reached an advance stage with a Cabinet note on the issue being finalised and a bidding document drafted.

The coal ministry had planned a two-stage bidding process to replace the screening committee route.

According to the draft, companies have to pledge annual production-linked payments (PL) to the government.The bidder will be required to quote a percentage of coal produced from a captive block year-wise, to be shared with the government for the entire mine life.