Wait for latest tenders to auction coal blocks likely to get longer

The wait for the latest tenders for auctioning coal blocks to non-power sectors and the long-pending commercial coal mining might get longer. 

The latest tranches of coal block auction to iron, steel, cement, fertilisers and captive power units are stuck in inter-departmental tussle, while the plan to allot mines for commercial mining and the sale of coal by private companies might happen after the general elections later this year. 

The Centre in October 2018, announced two new rounds of coal auction, after two failed attempts in 2016-17. 

In a marked shift from the earlier regime, the Centre has made changes in the coal allotment policy, with the mine winners being allowed to sell up to 25 per cent of the coal, if it is surplus, in the open market. Coal ministry officials said the price of selling surplus coal would be decided on the basis of the Coal India price chart, according to their grade/quality. 

The finance ministry, however, has raised apprehensions over the pricing formula. 

Government officials said discussions are being held between the two ministries. 

“The ministry of coal, however, would have to get the Cabinet’s approval again when the price of the coal sale is decided. The process is being expedited as any delay beyond January would lead to auctions coinciding with the elections,” said an official. Following a Supreme Court judgment in August 2014, cancelling all coal block allocations from the last two decades, the Ministry of Coal started re-allocation through transparent e-auctions. 

It allocated 86 coal mines to private companies through auction and to states for both power and non-power sectors. The revenue estimated to be collected is Rs 2.85 crore over 30 years, for mine-bearing states. 

In the first-ever e-auction of coal blocks during 2014, 34 coal blocks in three tranches went to private companies, including Hindalco, Balco, Jindal, JSW, Adani, GMR, Essar, among others. Later, five mine allocations were cancelled. 

After four years of enabling commercial mining and sale of coal in the new Coal Ordinance (Special Provisions), 2014, the Union Cabinet in February last year approved the methodology for auctioning coal mines to private companies. Nine coal mines had been identified. However, since then, the development has been very slow. 

“An initiative like this needs concerted efforts and consensus from all stakeholders. Industry has expressed the interest and we will take it forward,” said a senior coal ministry official. 

There has, however, been no intimation to the Nominated Authority for coal auction regarding commercial mining. The authority is responsible for conducting coal block auctions, under the Coal Ordinance (Special Provisions), 2014. 

Sources said Coal India labour unions are not on board on the issues of allowing commercial mining and sale of coal by a private entity. “Even after the Cabinet’s approval, the unions protested twice in April and October last year against any such move,” he said.