NEW DELHI: India is set to launch auction of coal blocks for commercial mining purposes on June 18, a month after the Union Cabinet approved the new revenue-sharing model which puts an end to the monopoly of state-run Coal India.
“We are launching first-ever commercial coal auction in the country on June 18. The launch of auction will be with the theme “Unleashing coal: New hopes for Aatmanirbhar Bharat”, the coal ministry said in a statement on Thursday.
The renewed focus on commercial coal mining will allow domestic firms like Essel Mining, Sesa Goa, JSW Energy, Vedanta, Adani and global giants like Rio Tinto, BHP Billiton and Glencore to mine, sell and help ramp up coal production from India’s huge reserves — the world’s third-largest at a whopping 350 billion tonnes. About 25 per cent of the demand, however, is met through imports, shows an official data.
The government believes that private participation will be a major boost for increasing revenue of coal mine-bearing states, but officials say that the investments will be accrued only over time.
“The plan is to keep the revenue share low to have active participation from companies but it’s a tough time to get fresh investments. Potential investors including multinationals aren’t willing to stretch their balance sheets,” said an official privy to the development, adding the floor price for the bid shall be kept at four per cent of the revenue and bids will be accepted in multiples of 0.5 per cent till the share in revenue touches 10 per cent and thereafter in multiples of 0.25 per cent.
With this methodology, prices will become more market-oriented and supplies would increase but the key would be to address the inordinate delays in land acquisition and the need for quicker statutory approvals. So far, it may be noted, just a handful of the blocks which have been auctioned are operational.
Earlier, Finance Minister Nirmala Sitharaman said nearly 50 coal blocks will be offered immediately for auctions and these mines would be in three categories: small, medium and large.
The proposed auction also has business-friendly terms and conditions, including reduced upfront amount, adjustment of upfront amount against royalty and liberal efficiency parameters to encourage flexibility to operationalise the coal mines.
Besides, 100 per cent FDI through automatic route has been allowed.