CCEA approves auction norms for coal blocks

The Cabinet Committee on Economic Affairs CCEA approved the production-linked payment on rupee per tonne basis,plus a basic upfront payment of 10 per cent of the intrinsic value of the coal block. The intrinsic value of coal block will be calculated on the basis of net present value of the block arrived through Discounted Cash Flow DCF method.

The DCF method relates the value of an asset to the present value of expected future cash flows of the asset. It is based on the principle that for any initial investment an investor will assess future cash flows from that entity to provide a minimum return.

To help benchmark the selling price of coal,the international freight-on-board price from the public indices like Argus/Platts will be used to calculate the mine mouth price. As a buffer against short-term volatility,the average sale price will be calculated by taking prices of the last five years.

For the power sector,the CCEA directed providing 90 per cent discount on the intrinsic value for tariff-based bidding,which will help in rationalising the electricity tariff.

To ensure early operationalisation of blocks,there would be an agreement between the coal ministry and the bidder to perform an agreed minimum work programmes at all stages. There would be development stage obligations in terms of milestones to be achieved such as getting mining lease,obtaining environment or forest clearances,etc. The bidder will have to give performance guarantee during the developmental stage. The successful bidder will get two years for exploration and five years for block development.

The new auction blueprint allows relinquishment of a block without penalty,provided the bidder has carried out minimum work programme. The environment ministry will review the details of the coal blocks before they are up for auction. However,final approval will be subject to the statutory clearances under the law.

Shale gas amp; oil exploration programme gets Cabinet nod

New Delhi: The Cabinet Committee on Economic Affairs CCEA has approved shale gas and oil exploration programme to boost domestic output.

In the first phase,ONGC and Oil India Ltd OIL have been permitted to explore for and produce shale oil and gas from onland blocks that were allotted on a nomination basis before advent of the New Exploration Licensing Policy in 1999.

This policy will allow national oil companies to carry out exploration and exploitation of unconventional hydrocarbon resources particularly shale gas and oil in their already awarded onland Petroleum Exploration License/Petroleum Mining Lease acreages under the nomination regime, an official statement said.

The government will offer shale oil and gas blocks to other companies through an auction planned after such a policy is taken to the Cabinet for approval in next few weeks. pti

Govt tweaks IDF norms

New Delhi: The government has eased norms for infrastructure debt funds operating through the NBFC route and also enabled investments by the Employees Provident Fund,pension and provident funds as well as insurance companies and mutual funds.

The CCEA also lowered the annual guarantee fee payable to the Concession Authority at an annual 0.05 per cent of outstanding debt financed by the IDF NBFC for the first three years of its operations. ens