Coal auction in Feb; diversion allowed to similar end-use unitshttps://indianexpress.com/article/business/business-others/coal-auction-in-feb-diversion-allowed-to-similar-end-use-units/

Coal auction in Feb; diversion allowed to similar end-use units

A successful bidder would have to utilise coal as per the agreement with the government.

The government, setting the ground rules for the upcoming e-auction and allotment of coal mines, has permitted the diversion of mined coal by an allottee to any similar end-use plant for achieving “greater efficiency and flexibility”.

The e-auction, which will be a two-stage process, will result in the allocation of at least 74 coal mines from the 204, whose allocations were cancelled by the Supreme Court in September, in the first phase. As per the draft rules on coal blocks auction released on Wednesday, a clutch of blocks will be made available to companies with specified end-use plants like power, steel and cement, including those in the private sector.

Coal secretary Anil Swarup said that the request for proposal documents will be finalised by December 22 and the bid due date has been set around February 11. The letter of accord is likely to be provided by mid-March.

“Our primary concern is the end use of the mined coal and the allottees will have to stick to their agreement with us on that end. A successful bidder can utilise the coal at any of its similar end-use plants by giving prior intimation to the government, and subject to conditions imposed by the government. Post-facto alliances formed by the allottee are also not likely to be a problem as long as the coal is used for the end-use mentioned in the contract,” Swarup said on Wednesday.

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The government has decided to place a cap on the tariffs to prevent aggressive bidding and protect consumers’ interest. It is also planning to limit the number of mines that a particular state-run or privately-owned company can win at the auctions to prevent a monopolistic situation.

Swarup said that the number of the 74 coal mines — 42 operational ones and 32 others ready for mining — to be auctioned, as opposed to being allotted to government-owned companies, was still being decided.

“We may end up allocating more than 74 mines. We are still searching for mines within the remaining 130 that are almost ready and can also be put up for allocation,” he added.