Coal India tender for public private partnership by March

Company already engages private entities on a contract basis, albeit on a small scale

A year after Finance Minister P Chidambaram pitched for a public-private partnership (PPP) model for Coal India Ltd (CIL) to bridge the demand-supply gap in the sector, the state-owned miner is set to come out with a tender in this regard next month.

The board discussed the matter here on Friday. “It will be a turnkey-based long-term agreement,” Chairman S Narsing Rao said after the meeting.

Through the mining, development and operator model, the CIL engages private entities on a contract basis, though on a small scale.

“In the new agreement, the blocks will be outsourced for 15 years. Everything will be the private player’s responsibility.”

“The model will be approved by the board soon. By March, we will come out with the tender. Following that, there will be a pre-bid meeting.”

However, some foreign miners who had shown interest are understood to have raised concerns over issues related to clearances. The primary clearances are to be secured by the CIL, as the process is considered easier for public sector entities.

The preliminary work on the PPP model, mooted by Planning Commission Deputy Chairman Montek Singh Ahluwalia in 2011, was carried out by the ministry. Subsequently, the matter was taken up by an inter-ministerial group on PPP in coal mining. The group comprised officials from the Planning Commission, the Department of Economic Affairs and the coal ministry.

CIL is likely to fall short of its 2013-14 production target by 8-10 million tonnes (mt). "So far this financial year, our production stands at 409 mt and the offtake is about 420 mt, both about 95 per cent of the target," Rao said. "For the entire financial year, our production and offtake are expected to be eight-10 mt lower than the target."

For this financial year, CIL had set production and offtake targets of 482 mt and 492 mt, respectively.