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Wednesday, July 08, 2020

Non-coal mine bids: States insist on clearances first

Without requisite clearances, states feel they will fail to attract desired bids.

Written by Priyadarshi Siddhanta | New Delhi | Published: May 23, 2015 2:56:44 am
Non-coal mine, non-coal mineral block, non-coal mine auction, PE, business news, india news, nation news, national news, Indian Express The leases for these 120 mines spread over 26,120 hectares and spanning across 17 states are the ones which are either operational or easily explorable.

Seventeen states have told the government that they are ready to auction concessions for 120 non-coal mineral blocks, but if these mines do not have the required clearances beforehand, they may fail to attract the level of desired bids by prospective bidders.

The leases for these 120 mines spread over 26,120 hectares and spanning across 17 states are the ones which are either operational or easily explorable. Although some parameters proposed by the Union mines ministry conform to the bid criteria for the 29 coal blocks auctioned recently by the ministry, but in the case of auctioning leases of non-coal minerals, the state governments have been entrusted to conduct the auctions.

In a meeting with the top representatives of these states on April 22, the mines ministry unveiled proposals on the financial parameters of the impending bids. The ministry officials led by mines secretary Anup K Pujari said for the first round of auction, bidders will have to submit technical bids and an initial offer. Thereafter, top 50 per cent technically qualified bidders (TQB) or 5 firms, which ever is higher, will proceed to the next round. If the number of TQBs are less than three, then the auction process will be annulled.

According to the minutes of the meeting accessed by The Indian Express, for the second round of auctions, the highest initial offer quoted in the first round will be the floor price.

For successful auction, at least one final offer would be needed and the bidder who submits highest final offer on conclusion of auction would be declared as the preferred bidder (PE) immediately. The PE would then submit the performance security (which is 0.25 per cent of value of resources) and receive the Letter of Intent (LoI). The PE would be expected to complete prescribed level of prospecting within five years. Once it is established that the block is mineable, the PE would pay for the upfront payment and apply for a mining lease, according to the mines ministry’s proposals.

But the states are upset that unless clearances are secured beforehand, the auctions may fail to attract desired level of bids. Rajasthan government’s principal mines secretary Ashok Singhvi told Pujari that obtaining forest clearances and approvals for land may not be possible for state governments. It also may not be possible for the states to undertake further level of exploration (needed for mining lease auction) as the forest department restricts drilling of bore holes in forest areas as per the guidelines of Union environment ministry.

Gujarat government’s representative T Natrajan argued that the past experience on auctions of limestone reserves in the state demonstrate that auctioning without the requisite in principle approval or no objection certificates are not fully successful.

Haryana representative Pravesh Sharma too mentioned about ongoing litigations related to forest clearances and argued that states cannot obtain forest clearances, as the government is seen as a regulator and not a project proponent.

Chhattisgarh government’s mines department director P Anbalagan too echoed similar views.

But the ministry has tried to sweeten the proposals by proposing that preferred bidders would not be required to pay upfront payment or royalties at the prospecting licence stage. Instead, they would need to make payments as per milestones to be enshrined in their respective leases.

The representatives of Odhisa, Jharkhand, Telengana, UP, MP, Meghalaya, Kerala, Maharashtra, Karnataka, J&K, Himachal, Goa and Andhra also attended the meeting.

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