Private players to again sell coal commercially in open market

24-Dec-2018

Eight million tonnes of domestic coal extracted by private producers is expected to be commercially available for the first time in the open market after five-six years, a move that will end Coal India’s monopoly which has been the sole domestic supplier of the dry fuel for the past four decades after the sector was nationalised in the 1970s.

The government has already set the ball rolling this year and on Wednesday, iron & steel, cement and captive power plants were to submit technical bids for 18 coal blocks from which they can sell 25% of their production in the open market at Coal India prices.

However, following requests of potential bidders and also considering the number of requests received through email, the centre has decided to extend the timelines for various stages of the auction. According to the revised timeline, the last date for submitting technical bids is now January 2, 2019, while price-based bidding for block auction would be held between January 14 and January 27, 2019. This is for the second time that the timelines are being extended.

Nevertheless, the blocks on offer are scheduled to have a total peak rated production capacity of around 32 million tonnes of which eight million tonnes can be sold in the open market.

The process of coal block allocation was pushed on to a slow track last August when the fifth tranche of the coal block auctions did not evoke the necessary interest from the bidders.

On Wednesday, bids would be submitted by interested parties for the sixth and seventh tranche of the coal blocks auctions. In fact, the government has decided to offer the same set of blocks in the seventh tranche that were offered in the fifth block which did not generate much interest.

As per the clauses for this round of auction, the time limit for starting production from each of these mines has been increased to five years from four.

The government had initially offered 13 blocks for the sixth tranche, but it pulled off Odisha’s Jamkhani block from the list a few days ago. Cement and captive power plants can bid for these blocks.

The centre has put on the block Brahampuri in Madhya Pradesh for this tranche which is expected to produce 0.36 million tonnes per annum (mtpa) at peak rated capacity (PRC). Three blocks from Jharkhand are on offer — Bundu (PRC 1 mtpa), Chitarpur (PRC 3.45 mtpa) and Gondulpara (PRC 4 mtpa).

In Maharashtra too, three blocks — Gondkari (PRC 1 mtpa), Khappa & Extn (PRC 0.30 mta) and Marki Mangli (PRC 0.20 mtpa) — are on offer.

Source: THE ECONOMIC TIMES