Coal news and updates

Govt Committee to finalise e-auction process by November 10

November 03: A high level Committee of senior officials of the Ministry of Coal may come out with details of processes to be adopted for conducting e-auction of at least some of the de-allocated coal mines by November 10, a senior official told ICMW.

“A Committee has been formed to work out by November 10, the details for conducting e-auction even as all prior allottees of 204 coal blocks too have been asked to submit detailed expenditure on the blocks like area of land acquired, cost of land, details of mine infrastructure and value of the mine infrastructure by then,” the official said.

Indicating that the government may not be able to take call on conducting auction of all the blocks simultaneously because of time constraints, the official said, “The Committee will go through the details submitted by allotteess and decide on principle, on case to case basis, rather than actual amount spent on each of the blocks.”

ICMW understands that the committee is working on conduction auction for a total of 74 blocks in the first round i.e 42 operational blocks and 32 to be operational blocks.

The official further said that there is no fixed time frame for conducting e-auction of all the de-allocated blocks, but the tender document for at least some of the blocks would be ready by December.

Asked whether the ministry has zeroed in on any service provider for conducting the auction, the official said, “We are working on it. May be in the next few days (10-15 days) we will take a call on appointment of service provider as well.”

ICMW learnt that the committee may be finding it difficult to ascertain the compensation to be paid to owners of already working mines.

“In the already operational 42 blocks, some coal has already been mined and the committee will have to find out how much coal is still left to be mined. Arriving at a compensation amount after ascertaining the investment made on land acquisition and mine infrastructure, plus assessing the value of yet to be mined coal is an issue because it is slightly cumbersome to assess the value of assets and the investment made,” a former official of the ministry said.

“May be they will assess the investment. But it is difficult to assess the operational cost and how to separate or include this from compensation to be paid to the prior allottees of working blocks,” the official said.

In the recent past when greenfield blocks were put up for auction, there was no question of investment and they had assessed the value of assets by taking international price of coal and had prescribed certain norms of investment that was to be deducted from intrinsic value, but for operational blocks the situation is different, the official pointed.

There are two parts with operational mines, the former official said. First is the compensation to be paid and it has to be paid outright as it cannot be combined with the penalty to be paid by operational blocks for already mined coal, he added.

Even if the compensation part is decided, it looks difficult that the committee will be able to come out with e-auction tender for all blocks by November 10 because once the compensation is fixed, the affected party should be given time, he pointed.

“I am not sure how the government wishes to proceed for coming out with tenders for all the blocks. May by they will tender for some blocks by December, but I think they should do it first for operational blocks,” the official said.

Pressing his point to first conduct auction for operational blocks, the official said, “If the entire process is not completed by March 2015, as has been directed by the Supreme Court, the government will have to approach to the court for extension of time.”

To a question, he said as the right of first refusal proposal was not found convenient by the government for operational blocks, they may have decided to go ahead with second option of reverse auction to provide some chance to them.

“The reverse auction may be a kind of substitute for right for first refusal wherein auction could be done in a closed timing,” the official pointed.