The Centre will need to have a proper contract model in place before it starts auctioning commercial coal mines, ministry officials indicate.

“It is difficult to give a timeline on when commercial coal mining will start. We first have to address all the issues before giving a timeline,” said Coal Secretary Anil Swarup.

The Ministry for Coal began consultations with industry stakeholders on Tuesday to prepare a roadmap for the commencement of commercial coal mining.

“Commercial mining is a very sensitive area. However, it is essential in our plan to achieve 1.5-billion-tonne coal mining by 2020. But before we start with it, a few things need to happen. Auctioning for commercial mining will need to be different from what has happened and for this we need to do all the ground work,” said Swarup.

He added that there has been a good start to the consultations but various issues, including whether commercial miners will be asked to sign a revenue sharing contract or a profit sharing contract, need to be addressed.

FICCI suggestions As part of the consultations, industry body Federation of Indian Chambers of Commerce and Industry (FICCI) presented its suggestions to officials of the Coal Ministry.

FICCI has recommended three options for commercial mining. One, that the mining lease be auctioned against an adjustable up-front price and production-linked payments for classified and explored blocks. Two, auction of prospecting licence-cum-mining leases for blocks having deposit identification and blocks where reserves are ‘proved’ but where mining has not started.

Finally, FICCI suggested a two-stage process commencing with an exploration contract followed by auctioning of mining leases for areas where reserves are yet to be proved and detailed exploration is pending.

As regards the production linked payments, FICCI said in its suggestions that bidders can commit a share of their mineable production multiplied by the benchmark market price. But to avoid pricing disputes, it suggested that bidders can also be asked to pay a fixed price in ₹/tonne, which would be applied to the annual production.

“In the government, you can’t keep changing the rules and goalposts. You have to look at the sector in the perspective of the scam ridden last few years,” he added.

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