By: Ajoy K Das
15th August 2012
KOLKATA (mining weekly) - The Indian government has proposed giving preference to government companies bidding for coal blocks on their own, thereby undermining public-private collaboration in the sector.
While government-owned coal companies would have the freedom to strike up joint ventures (JVs) with private investors, bids for blocks would have to be made solely from the government-owned company to be eligible for preferential allotment, an official in the Coal Ministry said.
In effect, undermining the purported government objective of promoting more public-private partnerships (PPPs) in the coal sector, the new restrictive preferential-allotment clause would prevent a number of coal companies from striking up collaborations with mine developers and operators (MDOs).
Under the competitive coal-block bidding policy proposed in the Mines and Mineral Development & Regulation Bill, the government would have the right to reserve certain categories of coal reserves for allotment to government-owned coal mining companies, under a special dispensation route.
According to Coal Ministry officials, government coal miners may enter into JV agreements with MDOs but the latter could not be permitted to have a majority stake in the venture, nor could bids for coal blocks be put in by the JV under the special dispensation route.
However, a section in the Coal Ministry, which has been a strong advocate of greater PPP in domestic coal mining sector felt that barring such JVs from preferential allotment under the special dispensation would be counter-productive in increasing coal production in the shortest possible time.
Contract mining in India was a new concept, with the Coal Ministry working towards a model framework for MDOs. However, it was suggested that the proposed rule would not reduce the risk for private, domestic or foreign investors, a Coal Ministry official said.
Collaboration between a coal-block asset owner and an MDO, with the latter having an equity stake in the venture, would ensure greater balance of risk load since a pure mining contract agreement often resulted in either the asset owner demanding lowest-cost mining or the operator inflating capital costs, the official said.
Edited by: Esmarie Swanepoel
15th August 2012
KOLKATA (mining weekly) - The Indian government has proposed giving preference to government companies bidding for coal blocks on their own, thereby undermining public-private collaboration in the sector.
While government-owned coal companies would have the freedom to strike up joint ventures (JVs) with private investors, bids for blocks would have to be made solely from the government-owned company to be eligible for preferential allotment, an official in the Coal Ministry said.
In effect, undermining the purported government objective of promoting more public-private partnerships (PPPs) in the coal sector, the new restrictive preferential-allotment clause would prevent a number of coal companies from striking up collaborations with mine developers and operators (MDOs).
Under the competitive coal-block bidding policy proposed in the Mines and Mineral Development & Regulation Bill, the government would have the right to reserve certain categories of coal reserves for allotment to government-owned coal mining companies, under a special dispensation route.
According to Coal Ministry officials, government coal miners may enter into JV agreements with MDOs but the latter could not be permitted to have a majority stake in the venture, nor could bids for coal blocks be put in by the JV under the special dispensation route.
However, a section in the Coal Ministry, which has been a strong advocate of greater PPP in domestic coal mining sector felt that barring such JVs from preferential allotment under the special dispensation would be counter-productive in increasing coal production in the shortest possible time.
Contract mining in India was a new concept, with the Coal Ministry working towards a model framework for MDOs. However, it was suggested that the proposed rule would not reduce the risk for private, domestic or foreign investors, a Coal Ministry official said.
Collaboration between a coal-block asset owner and an MDO, with the latter having an equity stake in the venture, would ensure greater balance of risk load since a pure mining contract agreement often resulted in either the asset owner demanding lowest-cost mining or the operator inflating capital costs, the official said.
Edited by: Esmarie Swanepoel
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