India Asks Industry Lobbies To Partner For Coal Mine Auction From June 11
India’s coal ministry is looking to allow private companies into commercial coal mining as soon as possible.
Looking to allow private companies into commercial coal mining as soon as possible, the Ministry of Coal has sought quotes from India’s four main industry lobbies to help conduct the auction process.
The ministry plans to kick off auctions for mining and sale of coal by the private sector on June 11, according to a notification issued on Wednesday. Through a limited tender, it asked Ficci, CII, Assocham and PHD Chamber of Commerce and Industry to join the process by becoming the ‘Programme Management Partner’. The groups are expected to submit quotes by May 29.
The partner’s role will include “event organisation”, including setting up of venue, registration of invitees, audio and visual photography, mobilising senior company officials and foreign investors to participate. It'll also conduct three virtual stakeholder consultations in Maharashtra, Chhattisgarh and West Bengal within two months of the closure of bids.
The tender comes after Finance Minister Nirmala Sitharaman, while announcing steps to ease Covid-19 stress on businesses, reiterated the plan to allow private companies into commercial coal mining by offering 50 mines. The government approved the idea in 2018 to let private sector participate in the extraction of fuel that generates more than 70% of India’s power. In January this year, the cabinet approved Mineral Law (Amendment) Ordinance, 2020, to enable wider participation in coal mining and removed the end-use restrictions that private companies faced.
Other Tender Requirements
According to the tender, the project management partner is required to be an industry chamber or association having:
- An average turnover of Rs 50 crore in the last three financial years.
- At least 500 members including companies from the coal user industries.
- Experience of directly working with the ministries.
The ministry plans to launch the auction of mines on June 11 and bids will be closed after 30 days, according to the notification. Consultations with stakeholders will follow in the next two months.
The auctions will be based on a revenue-sharing model with states. The floor price shall for the bid will be kept at 4% of the revenue, the coal ministry said in a statement earlier this month. The bids will be accepted in multiples of 0.5% till the share in revenue touches 10% and thereafter in multiples of 0.25%.
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At 350 billion tonnes, India has the third largest coal reserves in the world, but 25% of the demand is met through imports, according to the ministry. Private participation will be a major boost for increasing revenue of coal mine-bearing states, it said.
