Millennium Post

Govt to put in 18 more blocks in phase-I auction

You were planning to auction more than 74 coal blocks in the first round. Have you decided how many additional blocks will be put in for auction in the first round of auction of coal blocks?
A decision has already been taken to add another 18 blocks. So, now we will go in for 92 blocks in first round of auction which will either be auctioned or allotted to state-run entities. Out of these 92 blocks, 57 will be auctioned to power, steel and cement companies and 35 will be allocated to government companies.
Many project developers have already invested a huge sum in the coal blocks and for creating infrastructure in and around the blocks. Can these companies bag those blocks again?

There is no priority to be given to anybody. They can themselves bid and get those blocks in the
auction process. The one who bids the best gets it.

What about fixation of reserve price of the coal blocks. Has it been finalised?
It has not been formalized yet, but the team (expert group) is already working on it. And probably in a week’s time, we will be able to take a final call on that.
Will there be a provision of discount on reserve price especially for power producers to keep tariffs under check?
No, there is no such thing like discount. We are working on a formulation wherein bidding process and the formulation there under will ensure that the price/cost does not get passed on the consumers to the extent that it leads to increase in tariff.
Please brief us about the bidding process.

In the first go, we are looking at 92 blocks. Out of these, 42 are scheduled II blocks where mining is already happening and it is our endeavor that mining does not stop there because either the existing miner or subsequent miner gets hold of the mine and mining continues. So, our primary concern is for those 42 blocks where mining is happening. Then, we felt that there are additional blocks where they are ready for mining. Fundamental work has been done, though actual mining is not happening in these blocks. In this category there are 50 blocks now. Now, for all these 92 mines, tender will be out by December 22 and the entire process will be over by March 16.
Going ahead, how will you deal with the rest of the coal blocks? Will you be in favour of all clearances to be put in place before auction takes place?

We haven’t yet worked out a mechanism for auctioning remaining 112 blocks. Once we release the tender for these 92 coal blocks, we will have about a month’s time when bidders will do their due diligence. During that time, we will look at the remaining blocks as to what can be done with the blocks.
Even after the auctions are over, it will take some time for actual production to come up from these mines. Amidst this scenario, how do you foresee the coal import scenario?

In the 42 blocks where mining is already happening, there is a production capacity of 90 mt per annum. The additional 32 blocks which were originally sought to be auctioned or allotted have an additional capacity of 120 MT per annum. So, this will add to the overall availability of coal and this will lead to lowering of imports. But, I would like to say that imports are dependent on large number of factors and not merely availability of coal. It also depends on the quality of coal that is required and imported right now.
The coal ministry has been working on rationalisation of coal linkages for quite some time now. What is the update on that front?

It is one of our priority areas and we are working towards it. KPMG has submitted its report and it indicates clearly that if we do rationalization of coal linkages, we will save about Rs 6,000 crore per annum purely in financial terms. There are other benefits as well that will accrue. We are having a workshop on December 2 to finalise the details of certain rationalization because there is lot of swapping that will be involved. So, we are calling the stakeholders and will see as to how will we do it in the first phase and extend it to other phases also. Initially, we are taking about 11-12 cases where there will be mutual swapping.
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