Relook at competitive bidding for coal mining

The coal ministry has decided to revise the Cabinet note on competitive bidding for captive coal mining and is likely to give preference to companies setting up steel, cement and power units for allocation of coal mines in a state where they are coming up.

Ministry officials told Business Standard, a clause on the fresh proposal would be incorporated in the fresh note which would be circulated shortly.

"State governments had insisted on the clause since it was essential to attract investment in states," said an official.

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.

The applications will be processed through the existing screening committee route. Competitive bidding route has also been opposed by the power sector since it apprehends an increase in the coal price.

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.