Coal block winners can transfer ownership

Winners of coal blocks in the e-auction process will be allowed to change ownership and even sell the end-use plant, according to the provisions of the draft Coal Mine Development and Production Agreement.

The provisions, released by the Coal Ministry on Friday, stipulate that ownership of the successful bidder can be changed provided that the new owners conform to the eligibility conditions – such as not being convicted in a coal scam.

End-use plant Similarly, the end-use plant can also be sold to new owners along with the linked block. If the new owner does not meet the eligibility conditions, then the entire performance bank guarantee furnished by the successful bidder will be surrendered. It also provides that after the auctions, successful bidders of coal blocks in the e-auctions would need to submit a ‘Commencement Plan’ about starting mining operations within 30 days. The plan would form the basis for the winning bidder to follow the timeline to achieve peak rated capacity of mine. Bidders would also need to provide a performance bank guarantee equal to the aggregate of one year’s royalty and the annual peak rated capacity of the mine multiplied by winning bid amount. “The successful bidder shall conduct mining operations at the coal mine in accordance with the milestones or ‘Efficiency Parameters’. Failure to comply would result in reduction of the Performance Security in the manner that has been defined in the Coal Mines (Special Provisions) Rules, 2014,” said Vivek Bharadwaj, Joint Secretary, Coal Ministry. Bharadwaj is also the Nominated Authority of the coal block e-auctions.

Apart from furnishing the bank guarantee, payment of the upfront amount needs to be made in three instalments by successful bidders. As per the draft agreement, the performance bank guarantee shall remain valid for two years from the issuance of the vesting order if the mine achieves peak rated capacity. If it doesn’t achieve peak rated capacity, the guarantee will remain valid till it achieves the peak capacity.

Meanwhile, the successful bidder for a block will also be allowed to utilise the coal for other similar end-use plants. However, it would need to give a prior ‘Diversion Notice’ and permission for the same will be under the sole discretion of the Nominated Authority.

Comply with laws The successful bidder will also have to comply with applicable laws related to health, safety, welfare, social security and minimum wages for the workers, Bharadwaj said.

To monitor the compliance with the efficiency parameters, the bidders will report periodically about various stages of mining to the Nominated Authority and State Governments.

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