KOLKATA (miningweekly. com) – India’s Coal Ministry has finalised which ten coal blocks would be under the hammer in its third coal block auction.

The Ministry initially aimed to put 20 blocks up for auction in the next round, but the identification of these blocks took longer than anticipated and as such it had decided to get the bidding going with fewer blocks.

The identification process included establishing geological parameters, provinces and grades of coal suitable for the user industries for which the allotment would be made.

A senior government official said that only industries operating in the unregulated sector, wherein end-product prices were not under a price regime, would be entitled to bid in the next auction round.  This would mean the thermal power companies, where electricity tariffs were governed by independent regulators, would not be eligible to participate and the blocks would be set aside for companies in sectors like steel and cement.

According to geological data, of the estimated 850-million tons of coal to be put up for sale, the extractable reserves had been estimated at 360-million tons with ten blocks located across the provinces of Maharashtra, Chhattisgarh, Jharkhand and Odisha.

While no timelines have been set, the announcement of the auction and issue of bid documents were expected within the next two to three months.

However, the Ministry decided to tweak the auction rules from the previous two rounds in which 67 coal blocks were allocated through competitive bids.

In the third round, only a single bid would be permitted for each end-use project, the official said.

The auction of the coal blocks would be followed up by competitive bidding for linkage for coal supplies from Coal India Limited (CIL). User industries currently receiving coal supplies under negotiated contracts overseen by the committee would henceforth have to put in bids at auctions for coal supplies for a period of five years, from the country’s largest miner.

However, a large number of industries in the small- and medium-scale sectors, such as sponge iron producers, have come out strongly against auctioning coal supply linkages arguing that large companies with strong financial muscle would corner supply linkages through aggressive bids.

In response to this, the Coal Ministry was expediting another competitive bidding process for commercial mining. Miners allocated blocks for commercial mining would not have any end-use restrictions and were permitted open market merchant sale of coal.

In this category, predetermined coal blocks would be reserved for exclusive bidding by mining entities owned and managed by provincial governments. These mines would exclusively cater for small- and medium-scale industries, which did not have the ability to bid for coal supply linkages with CIL, the official added.