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Govt to auction old, rejected coal mines

The move is expected to take off some pressure from state-owned Coal India Limited (CIL) as it struggles to match the speed of power demand

Govt to auction old, rejected coal mines
Govt to auction old, rejected coal mines

New Delhi: The government’s plan to revive rejected coal mines by auctioning them again could actually take off some pressure from state-owned Coal India Limited (CIL) as it struggles to match the speed of power demand.

A total of 18 mines have been put on the block by the government for auction during the upcoming two rounds. At least 14 mines out of these had been put up for auction before but had failed to attract takers. The government plans to offer these only to steel, iron and captive power units and none to power generators. However, the captive power producer is allowed to sell up to 25 percent coal if it is surplus, in the open market.

The last two rounds of the auction that took place in 2016-17 had been cancelled after they failed to illicit the interest of buyers. The auction was only meant for the non-power sector. The Steel sector rejected the offer saying that the mines were not large enough and also that the sector was undergoing stress to bid for new mines, while there were others that were under litigation.

The steel and iron ore industry have alleged that CIL has been diverting coal only to the power sector while ignoring the non-power sector.

After a Supreme Court order cancelled all coal block allocations of the past two decades in August 2014, the Ministry of Coal had started re-allocation through transparent e-auctions. It allocated 34 operational coal mines to private companies through auction and to states through allotment – for both power and non-power sector. In the first-ever e-auction that took place in 2014, 34 coal blocks were allocated to private players like HINDALCO, BALCO, Jindal, JSW, Adani, GMR, Essar among others.

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Later, five mine allocations were cancelled. The latest auction comes at a time when power plants and the non-power sector are raising questions over the production of Coal India Limited. The steel and iron ore industry have alleged that the state-owned company has been diverting coal only to the power sector while ignoring the non-power sector. And for the power sector too, the coal production growth has been lower than power demand.

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