Around 40 steel, sponge iron and cement companies have so far purchased bid documents for the three captive coal mines on offer. This is the first auction of captive coal assets in India.

While the sale of bid documents will continue till May 27, the Central Mine Planning and Design Institute will hold a pre-bid meeting on behalf of the Coal Ministry with the interested parties in Ranchi on Friday.

On February 26, the Centre offered three small-size blocks — Jhirki & Jhirki-West (Jharkhand), Andal Babuisol (West Bengal) and Tokisud-II (Jharkhand) — to steel, sponge iron and cement industries, respectively.

Steep conditions Of the three, Andal Babuisol is the smallest. The underground reserve can produce around 0.7 million tonnes of coal annually for 25 years.

According to the auction methodology, the successful bidder has to pay 10 per cent of the net present value (NPV) of the asset as upfront payment. Together with the payment for exploration cost (₹3-5 crore), the upfront payment is estimated to be ₹35-45 crore.

The rest of the bid value will be calculated on per tonne of production. CMPDI will identify a floor rate, based on NPV, for such bidding.

The bidders may also have to confront issues related to land rights in at least two blocks – Tokisud-II and Andal-Babuisol.

Land tangle Coal India, which was previously allotted the blocks, had taken control of a substantial portion of the land under the Coal Bearing Areas (Acquisition & Development) Act.

The Act gives special powers to the State-owned miner to acquire coal-bearing land. On the flipside, land once possessed using the CBA Act can never be returned to anyone, not even to the Government.

Related Topics
comment COMMENT NOW