Competitive bids for coal mining on hold

Based on feedback from the power and steel ministries, the coal ministry has decided to postpone allocation of captive coal mines through th...

Based on feedback from the power and steel ministries, the coal ministry has decided to postpone allocation of captive coal mines through the competitive bidding route.

The ministry has decided to allot around 28 coal and lignite mining blocks through the inter-ministerial screening committee route, headed by the coal secretary with members from other ministries concerned and officials from state governments.

Sources clarified that this decision was not account of any union pressure but because of factors such as the present pricing structure where sectors such as power 8212; one of the largest consumers of coal 8212; are not in a position to follow free market pricing. By allotting the captive coal mines through the competitive bidding route, there was a risk that prices of coal could rise and that would lead to increase in power prices as well.

The ministry would now not be forwarding the cabinet note seeking an amendment to the Coal Mines Nationalisation Act allowing captive coal mines to be allotted through the competitive bidding route. Interested parties have already been asked to submit their applications for allocation of blocks by the end of this month, October 31.

The total amount of coal/lignite that can be mined from these 28 lignite and coal blocks adds up to over 3,200 million tonnes 816 mt of lignite and 2,395 mt of both coking and non-coking coal.

The proposal to allot captive coal mines through the competitive route was forwarded by the coal ministry to other ministries as far back as June this year. The objections raised by other ministries were thereafter referred to Prime Minister8217;s Office as Prime Minister Manmohan Singh also holds the portfolio of coal.

By following the screening committee route of consultations with various stakeholders, sources said it would be possible to monitor the end use of the product and also work out a pricing structure that would be appropriate for the user industry.

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Sources clarified that the present decision does not mean that the competitive bidding route has been shelved. An amendment to the Act would have taken a long time and instead of waiting for the amendment to be in place, the consultation process would yield results faster, they said. There are a total of 136 blocks out of which 87 coal blocks have already been allotted. Out of the remaining 49 blocks, sources said not all the available blocks are attractive. Therefore, as and when more blocks are open for mining, the competitive bidding route could be adopted.

Spotlight on illegal mining

NEW DELHI: Minister of state for coal DN Rao has urged the Prime Minister to set up a special panel 8212; comprising state-level officials and parties 8212; to work out a strategy to arrest the rampant rise in illegal coal mining. Highlighting that such illegal coal mining is concentrated in two states, Jharkhand and West Bengal, and confined to three coal companies 8212; Central Coalfields, BCCL and Eastern Coalfields 8212; the minister of state has pointed out that unilateral action by the Centre may prove futile. ENS