The Centre will kick-start the e-auction process for coal blocks on Thursday by offering 24 of the shortlisted 42 producing assets. Tender documents for each of the blocks will be released on December 27.
This follows the Cabinet approving the re-promulgation of the Coal Mines (Special Provisions) Ordinance and the guidelines for the auction and allocation process. The Cabinet also approved a bid floor price of ₹150 a tonne for non-regulated sectors, such as steel, and a reverse bid mechanism for the power sector, where the lowest bidder will win.
Of the 24 blocks, the Centre has reserved seven for the power sector, one for the steel sector and 16 for cement and captive power plants. “The auctions for the 24 blocks will be held between February 14 and 22. By March 23, we expect that agreements will be executed with successful bidders,” said Coal Secretary Anil Swarup.
Concurrently, 17 producing blocks will be allocated to State and Central public sector units.
In the first phase, the Centre planned to offer 101 blocks (including 42 producing and 32 ready to produce) but one producing block – Marki Mangli II – fell under the ‘no go’ area.
This resulted in the number of blocks coming down to 41. While starting off with 41 blocks, the Coal Ministry plans to complete the auction and allocation process for 100 blocks by March 31, 2015.
“We are starting the process 41 blocks because the Supreme Court decided that these blocks will continue to be mined by the prior allocattee till March 31, 2015, and hence the urgency to find new allocattees for them,” said Swarup.
For the power sector, the lowest bidder will win. The ceiling price will be decided as per the rates at which Coal India sells a particular grade of coal.
“In the power sector, if the ceiling is ₹700 per tonne for a particular block and the winning bid is ₹500 per tonne, then the gap of ₹200 per tonne will be transferred as a price concession to the electricity tariff determination.
This is how we hope to keep power tariffs lower than the current rates,” he said.
On top of the bid price and statutory royalty, bidders in the power sector will also have to pay a reserve price of ₹100 per tonne to State Governments. In the non-regulated sectors, the floor price cannot be less than ₹150 per tonne, but will be different for each block.
Bidders will be required to give a price offer in the technical bid stage as well. Only 50 per cent of the qualified bidders from the technical stage (subject to a minimum of five) will be allowed to participate in the e-auction process. Qualified bidders can then participate in the financial bid.