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The government will issue requests for proposals (RFP) for 42 producing coal mines on December 25 for auction by mid-February.
Power projects that banked on imported coal for generation would not be able to take part in the auction, senior government officials said.
The ministry of coal will go to the Cabinet with the formula to decide the bid price of coal mines on Wednesday.
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In the two-stage bidding, potential bidders will initially submit their offer price along with technical details to qualify for the next stage.
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The indicative price offer will be the bid price per tonne of coal produced.
In the second stage, half the qualified bidders will be allowed to participate in the auction.
“The applicable floor or ceiling price for the e-auction shall be the highest or lowest indicative price offer received from the prequalified bidders,” said the draft rules for the auction issued by the coal ministry.
In order to avoid windfall gains, the government has excluded case II bidders, which source imported costly coal.
The coming auction only allows case I and cost-plus linkage projects.
“Projects based on imported coal will not participate for the simple reason that the project economics will go wrong in that case”, said a senior official in the coal ministry.
“They are based on high-cost imports and domestic coal will be cheap for them. That would be a case of windfall gains,” he added.
Of the 204 coal mines cancelled by the Supreme Court, 101 will be up for bidding for end-use projects in the power, steel and cement industries.
The RFPs for 42 producing coal blocks will be issued this week. Auctions will be held 69 days after the public notice.
