Ministry issues draft norms for competitive bidding of coal blocks

The Coal Ministry on Monday issued draft guidelines for allocation of coal blocks through competitive bidding to ensure transparency in the process.

This is in line with the New Exploration and Licensing Policy (NELP), which invites oil and gas companies to explore and produce hydrocarbons in the country.

The Ministry in consultation with the Central Mine Planning and Design Institute has come out with out four set of options in the draft notice inviting offers for captive mining of coal for permitted end use in the blocks offered for the purpose namely steel, power and cement sectors. Stakeholders have been asked to comment within 15 days.

An interesting feature is that the Ministry proposes to give preference in allotment of coal blocks to bidders whose end-plants are in the same State as the coal blocks.

The notified coal blocks will be offered with reserve price tags fixed by the Ministry on the basis of the assessed potentiality of the blocks. The bidders' networth shall have to be at least equal to the reserve price tag and 15 per cent of the cost of its end use plant.

Qualifying bids of a block shall be ranked on the basis of the diminishing values of the bids offered towards upfront payment. Eligible bidder can bid for more than one block indicating its priority for allotment.

Successful bidders shall be responsible for exploration, development, operation and post operation activities including mine closers of notified captive coal blocks for end use.

At present, the coal blocks are offered to the end-users on a preferential basis by an inter-ministerial screening committee.

An amendment to the Mines and Minerals (Development and Regulation) Amendment Bill, 2010, in August last year paved the way for introduction of auction through competitive bidding for allocation of coal blocks to private companies for captive use.

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