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Revamp of coal auction rules on cards-Report

Coal News - Published on Thu, 19 Jul 2018

Image Source: EnergyInfraPost
Economic Times reported that the coal sector is poised for a round of business-friendly reforms after being opened up for private commercial mining. An high-power committee, headed by former Central Vigilance Commission Pratyush Sinha, has recommended a complete overhaul of regulations governing mine auctions including bidding on revenue share basis, allowing captive mines to sell part of the output in the market and easing of bank guarantees sources familiar with the matter said. The committee has also suggested linking the value of to-be-auctioned blocks with a proposed monthly coal index, which is to be developed on the basis of the prevalent spot price and rates for captive mining, international markets and Coal India.

The committee, whose members include former SBI chairperson Arundhati Bhattacharya and former Union Bank of India CMD Arun Tiwari, was set up in December last year to examine challenges of the current rupees per tonne bidding system and suggest changes for conducting future auctions.

In its report submitted to the coal ministry last week, the committee has sought to allow captive miners to sell 25% of their output in the open market. At present, captive miners have to sell any excess production to Coal India at a notified price. The report has also suggested flexibility in coal mining to captive bidders in line with requirements of the attached end-use plants. Currently, owners are penalised if the captive mines do not reach the production milestones as per schedule.

The formation of the expert committee last year was followed by annulment of the last two tranches of coal mine auctions the fourth and fifth rounds to non-power firms due to tepid response. The coal ministry seeks to auction 19 captive blocks this financial year and is in the process of identifying mines for commercial mining.

The present coal mine auction mechanism has been provided under the Coal Mines Special Provisions Act and the amended Mines and Minerals Development and Regulation Act. The procedure, laid down under the Coal Block Allocation Rules introduced by the NDA government, provides for reverse online auctions for power projects and forward bidding for other uses. Through enactment of Coal Mines Special Provisions Act, the NDA government had also paved way for private commercial coal mining.

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Posted By : Joykumar Irom on Thu, 19 Jul 2018
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