India Develops Modalities to Auction 74 Coal Blocks

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Researched by Industrial Info Resources India (Delhi, India)--India's Ministry of Coal (MoC) has finalized the methodology for auction of coal blocks, whose allotments were cancelled by the Supreme Court of India in September 2014, with a formula to decide the base price for each block that will shortly be put before the union cabinet for approval.

The government plans to complete coal block allocation through e-auction by February 2015. The ministry is set to auction 74 coal blocks- including 42 operational mines- in the first phase of auctions expected by January next year and 32 ready-to-produce mines will be offered to the developers with notified end-use projects like steel, power, cement and coal washing project.

The apex court has quashed allocation of 214 out of 218 coal blocks allotted to various companies since 1993 terming the method as "fatally flawed". It had allowed the central government to take over operation of 42 such blocks which are functional.

According to sources, bidding will be conducted separately for the power, steel and cement sectors, while the method will remain the same for all, except for projects that generate power under a pass-through mechanism, bids will be capped to keep electricity prices in check.

The method for setting the reserve price at the auction has been developed by a committee comprising of officials from the department of industrial policy and promotion and the coal, power, steel and mining ministries.

Pre-auction meetings are likely to start by December and proceedings for technical and price bids will continue till February 2015. There is a three-day window for the e-auction and nearly a week for awarding the mines. The rules for the auction are likely to be notified in a few days.

The government has set up a committee involving former Chief Vigilance Commissioner, to assess the value the land and assets of the cancelled mines by the end of this month. The government is also scouting for an e-auction platform and a bid-consultant for the auction.

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