India’s Coal Ministry moves to get coal auction under way

6th March 2019 By: Ajoy K Das - Creamer Media Correspondent

KOLKATA (miningweekly.com) – India’s Coal Ministry has taken the first step to get the much delayed coal block auctions for private miners under way, but uncertainties loom large over timelines with the national elections just round the corner.

The Coal Ministry last week floated a request for proposal (RFP) for the appointment of transaction advisers for coal block auctions with the mandate to oversee the deals, with such appointments slated to be completed by early April.

“The nominated authority under the Coal Mines Special Provisions Act 2015 and the central government under the Mines and Minerals (Development and Regulation) Act 2015 are considering allotment and auction of coal mines and coal blocks for which a transaction adviser will be selected,” the RFP document states.

The move to get auctions under way follows close on the heels of last month's approval by the Union Cabinet of Ministers that captive coal miners securing coal blocks through the auction route would be permitted free sale and free pricing of 25% of the production from the mine, unlike currently where captive coal miners have to mandatorily use the entire production of a mine for their end-use plants.

It bears noting that the Coal Ministry has conducted four rounds of coal block auctions since 2014 when the Indian Supreme Court cancelled a spate of mining licences to private miners on a preferential basis holding that the allocation had violated rules.

The Ministry had to cancel subsequent rounds of auction on apprehensions that investors' appetites for bidding had waned and hence two rounds of auction have now been clubbed together, government officials say.

As per the latest auction plans firmed up by the Ministry, 13 thermal grade coal mines with peak rated capacity of 22-million tons a year would be up for allocation as would six coking coal blocks with estimated peak rated capacity of 12.63-million tons a year.

The electronic auction would be conducted by State run MSTC.

Notwithstanding the first moves to get auctions under way, timelines for carrying out the process over the next few months remain uncertain with the Indian national election slated to be announced over the next few weeks.

The Election Commission of India is expected to announce the election dates shortly and the official Code of Conduct for all political parties and the government would kick in from the announcement of such dates.

The Code of Conduct inter alia would prevent the incumbent government from taking any policy decision and hence the auction process could at best be started around the end of May or thereafter, only after a new government takes charge in New Delhi.