KOLKATA (miningweekly.com) – India’s Coal Ministry has announced the auctioning of 27 coal blocks alongside the allocation of 15 blocks to government companies under the preferential dispensation rules.
Stating the objective of the next round of auctions, the Coal Ministry said that of the 27 blocks to be put up for competitive bidding, 21 had been set aside for end-use industries that are nonregulated, while another six were coking coal blocks reserved for exclusive bidding by companies in the iron and steel sector.
“At peak rated capacities, these 42 coal blocks will produce approximately 70-million tons a year,” the Ministry statement said, adding that the auction would be conducted on the State-run MSTC (formerly Metal Scrap Trading Corporation) electronic platform.
Detailing the latest tranche of coal blocks to be allotted to government companies, Ministry officials said that the sixth tranche would include five coal blocks identified for allotment to government companies for own consumption for power generation.
In the seventh tranche eight coal blocks will be allotted to state- and federal government-run companies for production and free merchant sale of the dry fuel. The eighth tranche's one coal block will be allotted for own consumption for production of iron and steel.
According to the Coal Ministry, the process of allotment and auction of the coal blocks will commence this month, starting with the publication of a notice inviting tenders, with the entire process to be completed by November 2019.
The fresh round of coal block allotment and auction kick-started by the Coal Ministry needs to be viewed against the dismal record of achieving higher production since coal blocks started to be put up for auction about four years ago.
Over the last four years, 85 ready-to-produce coal mines have been auctioned by the government. But of these just three mines have been able to achieve their rated capacities, one has been able to stick to its submitted mining plan and over six mines have failed to achieve any kind of production at all, government sources said.
The government has provisions to levy financial penalties on miners failing to achieve their mining plans submitted during the signing of the contract, after successful bidding at auction, with the legal provision of forfeiture of bank guarantees also an option; however, these measures had seldom helped in rapidly increasing domestic coal production, the primary objective of the government.
The collateral impact of failure to rapidly bring mines into production has been rising coal import dependency. This reflected in government data which shows that Indian coal imports during first quarter of the current financial year (April to June 2019) have surged 41% to 18.45-million tons, compared to the corresponding quarter of the previous financial year.