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After having failed to get the Rajya Sabha’s approval, the government on Wednesday initiated the process of coal block allocation again by re-promulgating the Coal Mines (Special Provisions) Ordinance. The coal ministry will issue 24 tenders on December 27.
The first ever e-auction of coal blocks will take place on the MSTC website, www.mstcecommerce.com, with the registration for bidders opening on December 25. The registration process will be according to know-your-customer norms and will be available on the website. The auction of coal blocks will take place from February 14 to 22. The transaction advisor for the auction is SBI Caps.
Anil Swarup, secretary, the ministry of coal, said out of the 101coal mines kept for the first phase of re-allocation for end-use in power, steel and cement sectors, 38 would be unregulated steel, cement and captive power sectors and 63 blocks would go to the power sector. Thirty-five coal blocks would be allocated to state public sector units. In the first phase, 24 mines will be auctioned.
Out of the list of 24 blocks, seven are for the power sector, 16 for other end-use plants of iron and steel, cement and captive power producers and one for the steel sector (coking coal). Two mines each shall be auctioned together. They are: Gotitoria East and West and Gare-Palma IV/2 and IV/3.
The Lok Sabha passed the Coal Mines (Special Provisions) Bill, 2014 in the winter session of Parliament. However, the government could not present the Bill in the Upper House owing to continuous ruckus. The government had in October promulgated a special Ordinance for re-allocating the coal blocks which were cancelled by the Supreme Court, citing them illegal. The Ordinance would now be repromulgated. The government plans to have a two-pronged strategy for e-auction of cancelled coal blocks. For the regulated sector where end-use is generation of power, there will be reverse auction. Whereas for captive power generation, steel and cement sector, there would be forward bidding model.
The potential bidders would have to pay upfront the floor price which is 10 per cent of the intrinsic value of the coal mine. Along with it, they will pay variable amount of bid and fixed amount for the value of land, mining infrastructure and other costs related to permits, licences, which were borne by the prior allottee. The government is hoping to collect Rs 7 lakh-crore as revenue from the auction of 204 cancelled coal blocks. Out of this, Rs 3.5 lakh-crore would come as the bidding price. The balance would come in form of Rs 100 a tonne royalty paid by the bidders to the state where the mine is located.
In the two-stage bidding, potential bidders would give their offer price, along with technical details, to stand qualified for the next financial stage. The indicative price offer would be the bid price per tonne of coal produced.
“For each mine, we will have a separate tender document and each tender document will clearly specify what will be the amount of compensation that will have to be paid to the original allottee. This payment shall be made by subsequent allottee,” said Swarup.
To avoid any windfall gains, the government has, however, kept the case-II power plants and those based on imported coal outside the bidding. The upcoming e-auction is only for case-1 and cost plus linkage projects.
The first ever e-auction of coal blocks will take place on the MSTC website, www.mstcecommerce.com, with the registration for bidders opening on December 25. The registration process will be according to know-your-customer norms and will be available on the website. The auction of coal blocks will take place from February 14 to 22. The transaction advisor for the auction is SBI Caps.
Anil Swarup, secretary, the ministry of coal, said out of the 101coal mines kept for the first phase of re-allocation for end-use in power, steel and cement sectors, 38 would be unregulated steel, cement and captive power sectors and 63 blocks would go to the power sector. Thirty-five coal blocks would be allocated to state public sector units. In the first phase, 24 mines will be auctioned.
Out of the list of 24 blocks, seven are for the power sector, 16 for other end-use plants of iron and steel, cement and captive power producers and one for the steel sector (coking coal). Two mines each shall be auctioned together. They are: Gotitoria East and West and Gare-Palma IV/2 and IV/3.
The Lok Sabha passed the Coal Mines (Special Provisions) Bill, 2014 in the winter session of Parliament. However, the government could not present the Bill in the Upper House owing to continuous ruckus. The government had in October promulgated a special Ordinance for re-allocating the coal blocks which were cancelled by the Supreme Court, citing them illegal. The Ordinance would now be repromulgated. The government plans to have a two-pronged strategy for e-auction of cancelled coal blocks. For the regulated sector where end-use is generation of power, there will be reverse auction. Whereas for captive power generation, steel and cement sector, there would be forward bidding model.
The potential bidders would have to pay upfront the floor price which is 10 per cent of the intrinsic value of the coal mine. Along with it, they will pay variable amount of bid and fixed amount for the value of land, mining infrastructure and other costs related to permits, licences, which were borne by the prior allottee. The government is hoping to collect Rs 7 lakh-crore as revenue from the auction of 204 cancelled coal blocks. Out of this, Rs 3.5 lakh-crore would come as the bidding price. The balance would come in form of Rs 100 a tonne royalty paid by the bidders to the state where the mine is located.
In the two-stage bidding, potential bidders would give their offer price, along with technical details, to stand qualified for the next financial stage. The indicative price offer would be the bid price per tonne of coal produced.
“For each mine, we will have a separate tender document and each tender document will clearly specify what will be the amount of compensation that will have to be paid to the original allottee. This payment shall be made by subsequent allottee,” said Swarup.
To avoid any windfall gains, the government has, however, kept the case-II power plants and those based on imported coal outside the bidding. The upcoming e-auction is only for case-1 and cost plus linkage projects.
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