The Hindu Business Line : Captive coal blocks to be sold to steel, cement cos

A large number of coal blocks lying in the command areas of the public sector coal companies - Coal India Ltd (CIL) and Singareni Collieries Company Ltd (SCCL) - will be auctioned by the Government on commercial basis to the highest bidder for captive use of cement and steel companies.

These coal blocks would be those not required by these two companies according to their production programme during the Eleventh Plan period.

Already two such blocks with Western Coalfields Ltd (WCL) in Madhya Pradesh have been identified, namely Tandsi-III & Extension and Thesgora-B/Rudrapur. Identifying other blocks lying in the command areas of the other coal producing companies based on technological and quality considerations are currently underway, sources said.

However, it may take some time before auctioning actually takes off because certain formalities need to be cleared.

Currently, the Mines and Minerals (Development and Regulation) Act (MMDR) does not permit the Government to auction coal blocks commercially through an open bidding system. The existing provisions in the Act demands that an empowered committee, usually headed by the Coal Secretary, decide on allocation based on a case to case basis on merit.

Apart from delay in decision making, the process has also come in for criticism on account of non-transparency.

The MMDR Act is now being amended. The Cabinet has also approved the proposed amendment and would soon be placed before Parliament "for introducing auctioning of coal mining blocks for captive use through competitive bidding as the selection process for allocation," official sources said.

According to officials, in the earlier process there were no fixed parameters and there was scope for discretion.

"The new system would also incentivise the companies buying the mines as their capital would be blocked which in turn would make them strive to develop the mines in the shortest possible time to ensure speedy return on capital employed as well as check raw material costs," officials pointed out.

Related Stories:
Coal India to roll out forward auction on March 28
SAIL, Tata Steel in 50:50 pact to mine coal blocks

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