Govt allows sale of 25% actual output from coal mines in open market

The successful allottees of the 19 coal blocks the government is planning to auction this fiscal for sectors including iron and steel will be allowed to sell up to 25 per cent of the actual production in open market at prices fixed by state-owned Coal India.

"The successful bidder shall utilise a minimum of 75 per cent of the actual production in the specified end use plants and is allowed to sell up to 25 per cent of the actual production in open market," according to the tender document for auction of coal mines for iron, steel, cement and captive power plants.

When asked about the number of blocks to be auctioned, he said, "Hopefully, 19 coal mines," a source said.

Giving the break-up of blocks, the source said that of the 19 blocks, 13 mines would be auctioned in the sixth tranche for the regulated sectors, including iron and steel, cement aluminium, captive power plants.

While in the seventh tranche, six coking coal blocks would be auctioned for iron and steel sector.

"Obviously there is a demand for coal. The economy is growing and these sectors are also growing and coal is necessary input for them. So we cannot say right now that there is no demand for it. And we have not gone for any auction from almost last one-and-a-half years. So we thought that this is the right time when we should go for it. And the delays were mainly due to the changes which were to be made in tender conditions, and changes were suggested by the Pratyush Sinha Committee," the source said.

"Two of the major changes which have been incorporated, first they (the allottees) will be able to sell 25 per cent of the raw coal in open market. Secondly the efficiency parameters have been relaxed. Now it has been extended to 66 months, earlier was 44. The reason is to give them more time to develop a mine. Because, the complaints generally were about environment clearance, forest clearance, and mining permissions were not forthcoming within stipulated time. So penalties were being imposed on them," the source said.

When asked about the price the allottee can sell coal in the market, the source said, "It will be at Coal India notified price. That will entail having more and more buyers."

The mines to be put to auction in the sixth round include - Brahmpuri coal mine in Madhya Pradesh, Bundu, Gondulpara and Chitarpur in Jharkhand, Gondkhari and Marki Mangli IV in Maharashtra, Jaganathpur A and Jaganathpur B in West Bengal, Bhaskarpara, Gare Palma IV -1 and Sondiha in Chhattisgarh, Jamkhani in Odisha.

While in the seventh tranche the blocks are Brahmadiha, Choritand Tiliaya, Jogeshwar& Khas Jogeshwar, Rabodih OCP, Rohne in Jharkhand and Urtan North in Madhya Pradesh.

Both rounds of auction are likely to be over by January 15, next year.