India would see its first ever coal block auction in January with the power sector getting the opportunity to bag mines with maximum reserves. This follows the Cabinet decision allowing private participation through the auction route in the sector.

“The Coal Ministry has readied the tender document. The agreement to be signed between the block winners and the Government is also in place,” a Senior Coal Ministry official told Business Line .

The official said that four coal blocks – Brahmbil, Phuljhari (East), Phuljhari (West) and Kordabehal – have been shortlisted for auctioning to the power sector. These mines are located in the Talcher coalfields in Odisha.

All these blocks are explored and have estimated reserves of more than 500 million tonnes each.

In addition, the Ministry is working at identifying one or two smaller blocks that may be offered to cement and steel companies, the official added.

On Tuesday, the Prime Minister-headed Cabinet Committee on Economic Affairs (CCEA) approved the coal block auction policy for private companies based on competitive bidding.

HOW WILL IT WORK?

The Coal Ministry will fix the reserve price for each block, which has to be paid upfront by the winning bidder. The Government has decided to offer 90 per cent discount on the reserve price for private power companies.

The Ministry will inform the respective States about the blocks.

The State would invite competitive electricity tariff bids from private companies to set up projects based on fuel from the particular mine.

The block would be allocated to the selected winner, who will have to pay the reserve price as well as share revenue in rupees per tonne. The Union Government will enter into an agreement with the company which is allocated the mine, while proceeds of the auction would go to the State where the mine is located.

All norms would be covered under Auction by Competitive Bidding of Coal Mines Rules, 2012.

>siddhartha.s@thehindu.co.in

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