The Centre will help get green nod for 16 of the 65 blocks to be put under the hammer in the first round and which do not have environment clearance.
According to a senior Coal Ministry official, the Government will facilitate clearances for these and 11 more blocks to be allocated to public sector companies. However, it is unlikely that the clearances will be in by the time of the e-auctions, scheduled for March 2015.
The 16 blocks without green clearances have coal reserves of 3.4 billion tonnes. Five of these have been earmarked for non-regulated sectors such as steel and cement and the others for the power sector.
For the power sector, a reverse bid mechanism will be used where the lowest bidder wins, while for the non-regulated sector a forward bid mechanism will be used for the auctions.
It remains to be seen whether the auctions end up being successful. There are mixed reactions within the industry regarding the list of blocks earmarked for auctions and allocations.
“There are many blocks which were linked to captive power units of steel, cement, aluminium, zinc and other plants. But many of these have now been earmarked solely for the power sector. Going solely by the rules, I can’t see who will have an end-use power plant ready for such blocks,” said an official of a private sector aluminium maker.
As per the Coal Mines (Special Provisions) Rules, bidders for already producing blocks will need to have 80 per cent investment complete in the end-use plant while for the blocks ready to produce, investment has to be at 60 per cent.
Some of the big losers from the non-power sector include Hindalco, ArcelorMittal, Tata Steel, Tata Sponge Iron, and Rungta Mines. Blocks that these companies won between 1993 to 2010 have now been reserved for the power sector, which means these companies cannot bid for these assets.