Coal news and updates

The captive coal mining firms in producing blocks might not lose their mines even after the deadline of March 31, 2015, set by the Supreme Court. The government's final rules for reallocation of cancelled mines through an e-auction process give the existing owners an advantage over new bidders.

 

In Phase-I, the 74 operational ones among the 204 deallocated mines will be on the block. The successful bidder will mine coal only for captive use, for projects in the power, steel or cement sector.

 

The detailed tender document that potential bidders have to file asks for precise details of end-use, amount of coal needed, distance of the end-use plant from the mine and the project's completion status.

 

“A company eligible to bid for any Schedule-II coal mine under sub-section (3) of Section 4 of the Ordinance shall have incurred an expenditure of not less than 80 per cent of the total project cost of the unit or phase of the specified end-use plant for which the company is bidding,” says a gazette notification in this regard, adding “a company eligible to bid for any Schedule-III mine shall have incurred an expenditure of not less than 60 per cent of the total project cost of the unit or phase of the specified end-use plant for which the company is bidding.” Under Schedule-II are the 42 producing coal blocks, while Schedule-III lists the 32 that are about to begin production.

 

This implies the power, steel and cement projects with attached captive mines could get these back after payment of penalty. “The methodology is transparent: The best fit bidder will get the suitable mine. The government is asking for the bidder's preparedness to use the mine allotted. In almost all cases, the existing owner is the best prepared with end-use,” said a senior executive in the know of the matter.

 

The industry stakeholders consulted by the government while designing the final auction rules are hoping the government will not let the investments made in end-use plants, especially those for power projects, go waste.

 

 

Source: http://www.business-standard.com/