Commercial coal mine auction tranche-III: Govt launches auction of 40 new coal mines

  • With coal mines rolling over from the previous tranche, there shall be a total of 88 coal mines on offer
  • Under tranche-III of commercial coal mine auction, there are four coking coal mines on offer

New Delhi: After auctioning 28 coal mines in the first two tranches, the Ministry of Coal has launched the auction process of 40 new coal mines (21 new mines under CM(SP) Act and 19 new mines under the Tranche 3 of MMDR Act) under tranche-III on Tuesday. With coal mines rolling over from the previous tranche, there shall be a total of 88 coal mines on offer. The total geological resources of about 55 billion tonnes (BT) of coal are on offer from these 88 mines, of which 57 are fully explored mines and 31 are partially explored mines. Also, there are four coking coal mines on offer.

Mines are spread across 10 coal-bearing states of Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Maharashtra, West Bengal, Andhra Pradesh, Telangana, Arunachal Pradesh and Assam.

Commercial coal mine auction tranche-III: New provisions in pact

From this tranche onwards, the Ministry of Coal has introduced provisions in the agreement related to sustainable mining operations, including mine closure, mechanised evacuation of coal and surrender of coal mine by successful bidder upon encountering difficult mining conditions. The list of mines has been finalised post detailed deliberations and mines falling under protected areas, wildlife sanctuaries, critical habitats, having forest cover greater than 40 percent, heavily built-up area etc have been excluded.

Key features of the commercial coal mine auction process include introduction of National Coal Index, ease in participation with no restriction for prior coal mining experience, full flexibility in coal utilisation, optimised payment structures, efficiency promotion through incentives for early production and use of clean coal technology. Further incentives are being contemplated by the Ministry of Coal with focus on sustainability.

Coal will play major part in India’s energy mix for 30-40 yrs: Joshi

Addressing the launch event, Union Minister of Pralhad Joshi stressed that the government are on a continuous journey to reform the coal sector and unlock values for the nation’s economy. Commenting on the energy consumption pattern of the country, Joshi said that the demand for power has increased by around 20 percent compared to pre-Covid times. The minister emphasised that India’s per capita consumption of power is one of the lowest in the world as compared to developed countries and that the power demand of the country is expected to double by the year 2040, owing to major steps taken by the government in connecting the remotest of places with power. Joshi reiterated that coal will continue to play a major part in the energy mix of the country for next 35-40 years.

Govt mulling incentives for coking coal blocks: Joshi

The minister also announced that the earlier rebate of 20 percent on the final offer on sale or consumption of coal for coal gasification/ liquefaction, may be increased. Discussions are in progress for incentives for coking coal blocks, Joshi added. “These steps will help in increasing the participation of prospective bidders,” he said.

‘Rise in global coal prices has increased reliance on domestic coal’

Addressing the gathering, Coal Secretary Anil Kumar Jain said that prices of imported coal has increased two to three times and has paved the way for utilising more domestic coal, thereby reducing imports. “This has been possible due to the various initiatives taken by the Ministry of Coal like allowing commercial mining, allowing enhanced production over and above the production as per the mining plan, providing incentives to the bidders, reduction in payments, allowing captive miners to sell coal etc. These steps have ensured that dependence on coal imports is reduced and that the domestic production is increased to meet the coal demand of the country,” said the Secretary.

Sale of tender documents start from today

The commencement of sale of tender documents shall start from October 12. The details of mines, auction terms, timelines etc can be accessed on the MSTC auction platform. The auction shall be held online through a transparent two-stage process, on the basis of percentage revenue share. This round of auction will be the 13th tranche of auction under CMSP Act and tranche-III of auction under MMDR Act.

SBI Capital Markets Limited, the sole Transaction Advisor to the Ministry of Coal for the commercial coal mine auction, had devised the methodology and is assisting the Ministry of Coal in conducting the auction.

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