MAC: Mines and Communities

Long Queue For Coal Blocks

Published by MAC on 2007-04-21
Source: The Telegraph ()

Long queue for coal blocks

The Telegraph

21st April 2007

The coal ministry has received over 1,400 bids for captive mining of 38 blocks.

The coal blocks, having reserves of 6.12 billion tonnes, are in Chhattisgarh, Jharkhand, Bengal, Maharashtra and Madhya Pradesh.

The mines have been earmarked for power, steel and cement.

There are 748 applications from power companies, 142 from steel and 531 from cement.

The criteria for allocation will be the end user and the size of the project. The ministry has reserved 15 blocks for the power sector, while for the rest iron and steel will get preference over cement.

In power, projects of 500 mega watt (mw) and above will get preference and in steel, it will be projects of one million tonne (mt) and above.

Coal secretary H.C. Gupta said the allocation would be completed within three months. He said there were no plans for more rounds of bidding this fiscal.

A screening committee, under Gupta, will decide on the allotments. The government has so far allotted 130 blocks, having reserves of 27 billion tonnes, for captive mining.

The government has now allowed standalone mining companies, both Indian and foreign, to bid for the blocks. However, they must have supply contracts with power, steel and cement companies.

Supply norms

The committee on coal distribution will submit its report in two weeks, according to Gupta.

The committee was set up after the Supreme Court barred distribution of coal through e-auctions.

The committee is reviewing the distribution norms for different sectors, system of classification of consumers into 'core' and 'non-core' users and supply arrangements for the small-scale and tiny sectors.

Before the apex court stopped e-auctions in December, user industries were classified into core and non-core sectors. Industries in the core sector received assured supply of coal at regulated prices, while non-core industries bid through e-auctions. The prices for non-core industries were also higher.

Since December, the arrangement remained the same for core industries. However, non-core industries had to buy coal through e-bookings at prices 30 per cent higher than the regulated price.

The committee is likely to drop cement, steel, fertiliser and paper companies from the core category.

A senior Coal India official said only power companies can claim the core status and get supply at the regulated price. This is because these companies themselves operate in a regulated environment.

The official said cement and power companies should be stripped of their core status, since they change prices at will which breaks the principle of supplying coal at regulated prices.

The government is giving low priority to cement companies in the allocation of coal blocks for captive mining, and it is likely the sector will lose its 'core' status in coal distribution.

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