Govt moves to ensure no entity has coal monopoly

In a sign that it will not allow a repeat of the past, the Coal Ministry has decided to have tighter monitoring norms for mine developers in the next round of allocations/ auctions.

Aiming to prevent any monopoly of the sector, the Government intends to cap the number of coal blocks a company can bid for. The cap will be applicable for public as well as private sector entities, said Coal Secretary Anil Swarup, while sharing the draft rules for the e-auction and allocation of blocks.

Developers will have to furnish a performance bank guarantee, which can be encashed if they fail to meet work commitments. There are instances of coal miners, including those in public sector undertakings, not commencing any work on the assets they own.“Certainly conditions will be there on monitoring the work,” said Swarup. The draft rules propose to allow a successful bidder or allottee to use the coal mined from a particular area in other similar end-use plants owned by it, after prior intimation to the Union Government. The Government can impose terms and conditions as needed, adds the draft. Following the Supreme Court verdict de-allocating 204 coal blocks, the Government had to come up with a mechanism to re-allocate the blocks to manage fuel supplies for key consumers, such as power, steel, and cement.

In the first phase, the Government proposes to auction/allocate 74 blocks (42 producing, 32 ready to produce) by March 31, 2015, with a potential to produce 210 million tonnes annually.

Swarup, however, said the number of blocks offered in the first phase could be more than 74. “The Ministry has been facing time constraints and therefore has been undertaking a lot of parallel activities. A committee looking into the reserve and floor price for the 74 blocks has already firmed up its formula. A decision has to now be taken by the Cabinet,” he said.

While not disclosing the details of the formula, Swarup said the intent is to see that the end tariff does not increase in the case of power.

A reserve price is being set for blocks that will be kept out of the auction and offered to public sector entities. Swarup said another committee was working on the number of such blocks. Indications are that at least 20 blocks could be kept aside for the state-owned companies.

On the levy imposed on miners of de-allocated blocks for coal extracted till September 24 this year, Swarup said the figure is yet to be worked out. He, however, said that it has to be deposited by the prior allottee on or before December 31. The levy on coal extracted from September 24 till March 31, 2015 has to be deposited on or before June 30, 2015, he added. Stakeholders have been asked to provide their feedback on the draft rules by November 24.

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