Coal blocks' allocation set to get transparent

Ministry will soon finalise guidelines for a bidding process for coal blocks


Sweta Ranjan | July 26, 2011

The coal ministry has assured greater transparency in the allocation of coal blocks planning a competitive bid for the mines by the year end. With most blocks up for auction having been indentified, the ministry is now working on drafting the final guidelines on bidding, union minister for coal, Sriprakash Jaiswal said at a stakeholders' meeting.

The meeting was called to finalise the terms and conditions of allocation of blocks through competitive bidding and to invite suggestions on the optimal structure, which would meet the requirement of all the stakeholders. The meeting was attended by representatives of industries, state governments and various central ministries to discuss various options for bidding process.

Currently, an inter-ministerial committee takes the call on allocation of coal blocks.

Though Jaiswal did not mention the number of blocks up for auction, ministry sources have said that upto 50 blocks would be on offer for bidders.

The ministry is yet to announce a preferred mode of payment out of upfront, reserve-linked and upfront payment linked with the development of end-use plants.

The ministry is exploring various options for inviting bids. One of the options which the ministry is also mulling over is putting a reserve price for a particular coal block and award the same to the bidder that quotes the highest above the stipulated price. The winning bidder can pay the amount in five installments.

Extractable reserve-linked payment option is another option that the ministry is considering. This allows the bidder to make upfront payment for a coal block as fixed by the government and also bid on the money it will pay per tonne of coal the company extracts over the lifetime of a mine.

There are 216 blocks with geological reserve of 50 million tonnes allocated to various public and private companies. Progress in most of the blocks, however, is not encouraging. Jaiswal also expressed concern over the slow progress in mining operations in some of the coal blocks.

He said in most of the cases, state governments had to play a key role in facilitating land acquisition, environmental clearance including NOC from local panchayats and grant of mining lease. He urged the state governments to set up a coordination committee under the chairmanship of chief secretary to review the progress of allocated coal blocks. He assured them all possible assurance from the centre in this regard.



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