Year-end deadline for coal block auction

New Delhi, July 25: The auction of coal blocks will begin by the end of this year, bringing transparency in the allocation of a scarce resource, coal minister Sriprakash Jaiswal said today.

At a meeting of stakeholders, the minister said the government had identified the blocks, and the guidelines would be finalised shortly.

Officials said some 51 mines had been identified for auction, which could hold between 8,000 million tonnes (mt) and 10,000mt of reserves. Coal mines have till now been allocated to Coal India and private and PSU captive users.

However, the process of allocation has come under attack, with allegations of favouritism arising in many cases.

The new rules will allow auctions for captive private users, while reserving mines for Coal India and state-run steel and power firms. The launch of competitive bidding was delayed earlier because of a controversy over the classification of certain blocks as “go” and “no-go” areas by the environment ministry.

Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2010 in August last year, paving the way for the introduction of the auction of blocks through competitive bidding to private companies.

The minister today discussed the detailed guidelines with various stakeholders of the industry. The meeting, attended by representatives of various industries, state governments and central ministries, discussed options proposed in the bidding process, officials said.

The CII has said the government should introduce “production-linked payments” in coal on the lines of “‘production-sharing contract” under the New Exploration Licensing Policy for oil and gas.

Jaiswal expressed concern over the slow progress in mining operations in some of the coal blocks.

He said 216 blocks with geological reserves of 50 million tonnes allocated to various public and private companies could contribute valuable coal resources, but progress in most of the blocks was not encouraging.

In most of the cases, states had to play a key role to facilitate land acquisition, environmental clearance, including approval from local panchayats and grant of mining lease, he said. Jaiswal urged the states to set up a co-ordination committee under the chairmanship of the chief secretary to review the progress.

Coal India

Coal India is in advanced talks to acquire about 30 per cent of an Indonesian coal asset and has sought government approval. Chairman N.C. Jha refused to divulge the identity of the company, but sources said CIL had started negotiations with Indonesia’s Golden Energy Mines.