Coal news and updates

Coal block winners sign pacts with govt

Hindalco, Balco , Jaypee Group and Anil Ambani’s Reliance Group are among the 23 coal block winners who have concluded the Coal Mine Development and Production Agreement with the Government.

The agreements were signed and executed by the Nominated Authority. The successful companies will now have to furnish the performance bank guarantee which is expected to be in excess of ₹5,000 crore, before the vesting order is issued by the Ministry for Coal on March 23.

Companies will have to furnish a performance bank guarantee equalling one year’s royalty as per the annual peak rated capacity of the block and the winning bid amount multiplied by the peak rated capacity. For example, in the non-power category, Hindalco, which won the Gare Palma IV/5 block for ₹3,502 a tonne will have to furnish nearly ₹370 crore as the performance bank guarantee. This would include around ₹18 crore as one-year royalty on the annual peak rated capacity and around ₹350 crore as the winning bid amount multiplied by the peak rated capacity. Similarly, Essar Power which won the Tokisud North block for ₹1,110 a tonne is expected to furnish nearly ₹290 crore as the performance bank guarantee. This includes ₹31 crore as one- year royalty and ₹260 crore as the winning bid amount multiplied by the peak rated capacity.

The Government had estimated total benefit of royalty and e-auction amount over the entire mine life of 31 auctioned blocks to be ₹2.09 lakh crore. If awards for the eight blocks under re-examination are withheld, the proceeds from the 23 blocks will be below ₹2 lakh crore.

This would mean that the Government is on track for meeting its deadline of successfully concluding the auctions before the Ordinance lapses on April 5. However, companies whose bids are under re-examination (winning bids for eight blocks) due to outliers in the bidding pattern did not ink the agreements. The Government is expected to take a decision on these blocks by Friday.

source:http://www.thehindubusinessline.com