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India to revamp coal block auction process

22nd January 2018

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – India’s Coal Ministry has initiated a revamp of the coal block auction process following the cancellation of two bidding rounds last year, owing to a poor response from non-power companies.

The Ministry has set up a committee to prepare a report suggesting changes in the auction model and expects to put in place a new regime within the next six to eight months.

Revenue sharing and/or production sharing contracts with successful bidders are among some of the changes under consideration.

The thinking is to align the coal sector with oil and gas, through the introduction of its own version of Open Acreage Licensing Policy (OALP) that governs crude oil and natural gas exploration and production.

Under OALP, which forms part of the new Hydrocarbon Exploration Licensing Policy, exploration companies can carve out blocks of choice and, once expressions of interests have been submitted and accepted, government will hold an auction every six months to allocate the asset to a successful bidder.

At the same time, under the liberalised exploration policy, any exploration company finding exploratory projects viable for development will have full production, marketing and pricing freedom and a revenue sharing contract with the government.

Since auctions were made mandatory for the allocation of coal blocks, the government has been able to hand over 72 blocks, through reverse auction in the case of power companies and forward auction for non-power companies.

However, with the government working to throw open commercial coal mining to private miners, the Coal Ministry is open to the idea of miners paying government revenue based on a ton of production or share part of the production as per suggestions received from the industry, ministry officials have said.

Meanwhile, in a related development, government miner, Coal India Limited (CIL) has been allocated 11 new coal blocks, through the preferential dispensation route.

The 11 operational and new blocks have been allocated to various wholly owned subsidiaries of CIL and at full capacity utilisation, the blocks have the potential to incrementally add 225-million tons a year to the group’s total production.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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