38 coal blocks to be auctioned says coal ministry, 16 reserves for power sector

2 JUN, 2012, DEBJOY SENGUPTA, ET BUREAU
KOLKATA: The coal ministry has just released a list of 54 coal blocks that will be allocated through a mix of auction route and nomination basis to private and government sector entities.

Some 38 has been earmarked for allocation to integrated steel plants in the private, cement, sponge iron, surface gasification, power, and state governments. These blocks, lying in the coal belts of seven states of Chhattisgarh, Jharkhand, Maharashtra, West Bengal, Orissa, Madhya Pradesh and Andhra Pradesh, have a tentative reserve of about 19.1 billion tonnes of coal.

According to the list released by the government, 16 blocks with a total reserve of 8,164 will be auctioned for power sector. All of these blocks are, however, partially explored.

"The coal blocks earmarked for allocation through tariff based bidding and for allocation through auction by competitive bidding shall be allotted only after exploration and preparation of geological report," said a coal ministry statement.

According to the ministry of coal 12 blocks with a reserve of 5,304 mt will be auctioned to for integrated steel plants, seven blocks with reserves of 636 mt will for cement companies, five blocks for sponge iron companies with a total reserve of 380 million tonnes and two blocks with 136 million tonnes for surface gasification projects. Another 12 blocks with reserve of 4,453 million tonnes will go for the government sector.

Nevertheless, the list released says, only 2 of these 54 have been explored in details, while some 19 have been explored in semi-detailed format. As many as 19 blocks have been regionally explored while only 6 have been explored in the initial phases and about 10 of these blocks have not been explored at all.

The ministry has decided that the coal blocks earmarked for power sector are meant both for tariff based bidding and central government companies engaged in production of power. The further earmarking will be done in consultation with the power ministry and CMPDIL and will be notified separately before the applications are invited.

It has also decided to that blocks meant for government companies will be allocated for commercial mining only and they will be circulated inviting applications after detailed terms and conditions are finalised.

Applications for the blocks reserved for integrated steel for government companies will be separately circulated after finalisation of terms & conditions. The remaining blocks meant for allocation through auction by competitive bidding would be advertised once the bidding documents are ready.

Coal India subsidiary, Central Mine Planning & Design Institute Ltd selected the consultant for handling coal block auctions and its chairman A K Singh said: "We have recently awarded the contract for handling coal block auctions to Crisil."

There were eight parties in the race - Ernst & Young, PricewaterhouseCoopers (PwC), KPMG, MetalJunction, Crisil, Deloitte and Capital Fortune.

The responsibility of inviting global bids and selecting the consultant was given by the ministry of coal to CMPDIL - a Coal India subsidiary which specializes in coal block exploration, research and development in coal. Following this the consultant will be handling the coal block auction process almost in entirety. Some 54-odd blocks will be up for bids by the ministry of coal.

The selected consultant will be responsible for finalising the notices for inviting tenders, preparing the bid documents, assisting in conducting the bidding exercise and evaluating all bidders leading to selection of successful bidder.

The same consultant will finalise the methodology of fixing the floor price and reserve prices of coal blocks. It will also draft the model agreement that will be signed by the government with the successful bidder.