Coal India will henceforth have to pay the reserve price, as any other bidder, for acquiring blocks in fresh auction rounds. This will be so even for blocks offered to the public sector entity on nomination basis.
A reserve price will be derived by the Coal Ministry for a block. Companies proposing to acquire the asset will have to pay this amount to the respective State Governments for undertaking mining activities. In case of Coal India, it was till now not paying any reserve price. However, as a first step for creating a certain level playing field, the Ministry now proposes that even Coal India will have to pay this price.
The Ministry is in the process of finalising auction norms that would be similar to the licensing rounds of oil and gas blocks.
“The new transparent mechanism for coal block auction would be in place in the next three months,” the Coal Minister, Mr Sriprakash Jaiswal, told
The Ministry has sought expressions of interest (EoI) from consultants to suggest mechanisms for finalising bid documents, deriving a formula to determine reserve price, and agreement to be signed between the contractor and the Government. Those shortlisted include SBI Caps and PwC. Fifty-four coal blocks with total geological reserves of about 18.22 billion tonne have been identified for allocation.
Of these, 16 blocks with 7.27 billion tonne reserves for Government companies and another 16 blocks with 8.16 billion tonnes for power sector companies have been selected through tariff based bidding. Twenty-two blocks with 2.79 billion tonnes for companies selected through auction have been earmarked for allocation including to steel and cement sectors.
These coal blocks are located in Andhra Pradesh, Chhattisgarh, Odisha, Jharkhand, West Bengal, Madhya Pradesh and Maharashtra. The blocks offered on auction henceforth would be continuously monitored by Coal Ministry.