Of the 41 blocks that Prime Minister Narendra Modi announced would be auctioned for commercial coal mining, 33 were previously allotted to public sector or private sector companies but later surrendered. Previously, coal blocks were only allotted to industries, such as power and steel industry, which use coal as an input.
Experts noted that the surrender of these blocks did not indicate any issues with the mining potential of these blocks as many were surrendered after the allottees did not develop the blocks for production in line with timelines agreed upon.
“Some of these blocks had not been developed as per their mine development plans and (the allottees) had to give year on year updates on their status. Some of the blocks allocated to PSUs were not developed and there were some queries raised by industry that these had not been developed as per the mining plans,” said an expert representing a Delhi-based industry lobby group.
Only eight of the 41 blocks set to be auctioned have not been allotted previously and have a target mining capacity of 24.1 million tonnes per year, as against the total target mining capacity of around 223 million tonnes per year.
The expert said a lot of thermal power plants that were set to use coal from such blocks did not come up as state governments moved towards renewable energy. The expert noted that many such plants currently operational were also operating at only 30-40 per cent of their plant load factor.
Of the 41 blocks, 30 have been classified as “explored”, with another four coal blocks classified as “explored in detail”. The auction of these blocks reduces the perceived risk for bidders according to Vipul Tuli, chairman of FICCI Power Committee.