Auction of coal mines in mid-Feb

Coal blocks whose allotments were cancelled by the Supreme Court in September will be auctioned over three days in February. The Centre plans to award the blocks by the end of February to meet the court's deadline.

The coal ministry began work on reallotment of the blocks in November by drawing up bidding rules for the electronic auction and designating several authorities for carrying out specific tasks, a government official said.

Prospective bidders will quote a price for every tonne of reserves in each mine. Winners at the auction will have to pay prior allottees for the assets that will be passed on along with the mines.

"We are aiming to notify the rules for the auction by mid-November," a government official said.

Pre-auction meetings are likely to start by December and proceedings for technical and price bids will run till February. There is a three-day window for the e-auction and nearly a week for awarding the mines. A custodian will be designated for mines that do not find takers.

The Centre has set up a committee under Pratyush Sinha, former chief vigilance commissioner, to value the land and assets of the cancelled mines by the end of November.

A committee of officials from the department of industrial policy and promotion and the coal, power, steel and mining ministries on Tuesday decided the method for setting the reserve price at the auction. The Cabinet is likely to approve the formula at its next meeting.

The method is same for all end users in the cement, steel and power industries. But for projects that generate power under a pass-through mechanism, bids will be capped to keep electricity prices in check.

The Centre is scouting for an e-auction platform and will also seek a consultant. The department of telecommunications, which has held electronic auctions for spectrum, is a party to the discussions.

Piyush Goyal, minister of state for coal, power and renewable energy, said the coal ordinance bill would be tabled in the winter session of Parliament. "The government is confident the opening up of the sector and re-allocation of mines will be enough to meet the demand of the power sector," he told reporters last week.

In the first phase of re-allocation, 42 working coal mines and 32 in line to start will be offered to developers with notified end-use projects like steel, power, cement and coal washing projects.

HOW THE PROCEDURE IS SHAPING UP

• Government's new model of e-auction on the runway
   
• Evaluation committee, Nominated Authority for Ordinance already in place
   
• Modality to conduct e-action to be placed on public forum by next week
   
• Determination of compensation to the prior owner of mine, floor price for bidding by month's end
   
• E-auction to be on the lines of spectrum auction
   
• Around 204 coal blocks up for e-auction
  

 

42 operational coal blocks & 32 about to produce blocks to be pooled for first phase of auctions
 

Coal blocks to be auctioned for end-use for power, cement and steel sector