Coal India awards discontinued UG mines to successful private sector bidders

On revenue sharing model

Coal India (CIL) in a bid to tap the latent coal reserves of some of its closed and discontinued underground mines has awarded 23 such mines on revenue sharing model to successful bidders of the private sector. The cumulative peak rated capacity of is 34.14 million tonnes/year (MT/Y) while the total extractable reserves are estimated at 635 MT.

Earlier, CIL had identified a total of 34 discontinued mines where good quality coal reserves are lying dormant but may not be financially viable for CIL to mine them. CIL has decided to tender and offer these mines to willing private sector players who are prepared to operate and produce the dry fuel and share part of the revenue with CIL. Successful bidder is the one who offers the maximum revenue to the authority, which is the coal company. The minimum revenue to be shared is 4%. The contract period is for a maximum of 25 years.

The advantages are conservation of resource, effective substitution of imported coal for non-regulated sector with good quality coal locked up in these mines and provision of livelihood to the local communities where these mines are revived. From environmental point of view there would be no land degradation as the mining infrastructure is already in place. CIL is also identifying few more mines for the purpose to attract wider participation with bid norms relaxed.

On the total quantity of coal sold exclusively for coal gasification or coal liquefaction purpose in a year, a 50% on contracted percentage of revenue share of the authority will be provided to the operator.

The successful bidder or the mine operator to who the mine shall be handed over on as is where is basis, can also utilize the existing infrastructure and project facilities without any additional payment to the authority. In case of a consortium foreign bidders are allowed to participate as second or third members of the consortium, as per Government e Marketplace (GeM) portal.

The mine operator shall act as the agency responsible for selling coal mined from these mines at market driven price through an auction process on behalf of the authority. They shall have the freedom to adopt their preferential method of technology and deployment of mining machinery to extract coal from the mines.

Of the 34 identified mines, the West Bengal based Eastern Coalfields and Jharkhand based Bharat Coking Coal account for 10 each. Western Coalfields -5, South Eastern Coalfields -4, Mahanadi Coalfields -3 and Central Coalfields 2 add up the remaining.

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