Coal ministry meets top bankers ahead of e-auction of coal mines

To keep lenders in confidence before re-allocation of coal mines, the coal ministry held a meeting with key banks and financial institutions on Thursday.

The ministry hopes to involve the lenders actively in the e-auction of coal mines. "Lenders are an important link in the auction of coal mines. This meet is being held to apprise the lenders of the auction process and help them understand the likely assistance prospective bidders might require," said one of the participants in the meeting. Around 20 national, regional and private banks, along with the Rural Electrification Corporation and Power Finance Corporation, were invited by the coal ministry for an open discussion on the e-auction.

Keeping the lenders in confidence is likely to benefit the bidders from the power sector the most. Most power generation stations are reeling under fuel crunch and have defaulted on their loans. Of the 136 Gw stranded power generation capacity with an investment of Rs 6.23 lakh crore, as much as Rs 4.36 lakh crore is feared to convert into non-performing assets. Coal-based projects of 46,500 Mw suffer from with time and cost overruns, hurting a committed investment of about Rs 3 lakh crore. The government initiated the re-allocation process by starting allotment of 36 coal mines to state-run entities from January 23. Of the 36 coal mines, one is for the steel sector and the rest for the power sector. The e-auction of 46 coal mines will start from February 14. Out of these, 16 are for power sector and rest are for the iron & steel, and cement sectors, and captive power producers.