Government to give weightage to power, steel companies with good record while auctioning coal blocks

NEW DELHI: The government will give weightage to companies with existing power, steel or cement plants and experience in developing mines while auctioning coal blocks, according to officials aware of the rules being framed for the auction.

Preference will also be given to bidders on the basis of preparedness of their end-use plants, proximity of their projects to the mine, and their financial and past development records, they said. The government is expected to shortly issue the draft rules for auction of 204 coal blocks that were cancelled by the Supreme Court in September.

The rules will specify eligibility of companies for participating in the bidding, while the methodology for auction will be placed before the Union Cabinet for approval, a senior government official said.

“Companies with operating end-use plants or those which have made over 90 per cent investment in the associated projects will get priority during auction as these 74 mines are either producing or will soon become operational,” he said. Stakeholders’ comments will be sought on the draft rules that allow companies to use coal from a block in different end-use projects belonging to the same group. The companies will have to provide details of such projects while bidding.

Companies owning 42 operational coal mines will have to pay Rs 295 per tonne additional levy for the coal mined in two parts. The levy for coal mined till September 24 has to be submitted by December 31, while the balance for coal extracted till March 31, 2015, has to be paid by June 30, 2015.

The auction of coal blocks will be conducted in two stages—technical and commercial. Companies will have to meet the technical parameters to bid for the blocks.The government is expected to issue the tender documents for auction by December 15, giving details of grade of coal, geological reserves, extractable reserves and capacity of 74 coal blocks that will be offered in the first round of auction.

However, the rules are silent on statutory clearances. The companies will have to commit milestones for development of the mines at the time of signing the allocation letters.

Allocation letters, unlike in the past, will have comprehensive details about the blocks, end-use projects and the companies.