Coal news and updates

Indian national elections casts cloud over coal MDO appointment, auctions

India’s Coal Ministry was running out of time to get producer Coal India Limited (CIL) to appoint mine developers and operators (MDOs) as well as put coal blocks up for auction, with Indian national election dates to be announced shortly and the model code of conduct to kick in immediately thereafter.

Government officials said that with all political parties already in campaign mode and election dates anticipated for around April to May, the Ministry’s hectic efforts to tackle the coal crisis were looking to come to naught, as most stakeholders were not prepared for the appointment of MDOs or the auction of blocks.

Once the election dates were announced, the model code of conduct would kick in, which would prevent the government from taking any policy decision that could be interpreted as influencing the voters, the officials added.

CIL’s  appointment of MDOs had been dragging on since the company expressed its discomfort with certain provisions of the draft MDO contract provided by the Ministry, with the miner questioning risk sharing provisions and claiming the lack of clarity on concluding contracts with MDOs would put CIL at a disadvantage, the officials said.

Meanwhile, the auctioning of five coal blocks scheduled for this month was also under a cloud with both the Central Mine Planning and Design Institute (CMPDIL), a subsidiary of CIL, and its consultants, Credit Rating Information Services of India, still to settle grey areas in the auction process.

CMPDIL had been directed to represent the Coal Ministry in the auctions, but it has sought more time to settle contentious issues around upfront payments to be made by a successful bidder, based on per ton production and penalties for breach of production schedules.

However, Ministry officials said postponing the auction process would definitely result in it clashing with the national polls and putting it in cold storage until the next government was in place.

The five coal blocks slated for the auction block included two prime coking coal assets estimated to offer 60-million tonnes over a life span of 25 years.

Source: www.miningweekly.com