The Government is planning to auction seven coal blocks in a month’s time, after discussions with the Government auditor, Comptroller and Auditor General of India (CAG), regarding the auctioning process.
The blocks would be offered to private players in power, steel and cement sectors under Auction by Competitive Bidding of Coal Mines Rules, 2012.
“While the power, steel and cement companies would have two blocks each, one block would be open for mining,” said a Senior Coal Ministry official.
The estimated coal reserve and locations of these seven blocks are not known for now. However, the Coal Ministry official said that the blocks are ‘explored.’
Explored blocks generate more revenues and attract more bidders.
The feasibility study of the mines has been completed and expected mineable reserve, capital and operating cost and production rate are known.
The blocks would bear a minimum floor price that the winner of the mine would have to submit after the allocation.
Crisil Infrastructure Advisory was engaged by the Coal Ministry to come up with a methodology for calculating the floor price.
The two blocks for power developers will get a discount on the reserve price.
But this comes with a condition that the electricity produced should be sold to discoms on a long-term power purchase agreement.
BLOCKS FOR GOVT Cos
The Coal Ministry is at the last stage of allocating 14 out of 17 mines put out for Central and State public sector undertakings.
The Government is offering these blocks without charging reserve price (the minimum cost to be submitted by the firm getting the block).
This is because the blocks are not fully explored and therefore, potential reserves are not known.
siddhartha.s@thehindu.co.in