The coal ministry decided to auction 54 blocks on upfront payment basis. The ministry however might not offer mines to power companies. The ministry is currently considering a proposal to earmark blocks to states that can call competitive bids for power supply.
The coal ministry also decided that blocks will not be given free to government companies. Though competitive bidding route would not be applicable to centre and state government projects, PSUs will have to pay reserve price for coal blocks. Preference would be given to companies setting up end use projects in the state that hosts the coal block and agree to match the highest bid.
The blocks lie in the coal belts of seven states of Chhattisgarh, Jharkhand, Maharashtra, West Bengal, Orissa, Madhya Pradesh and Andhra Pradesh.
Blocks with over 18,000 million tonnes of reserves is set to go under hammer in the first round of competitive bidding. The government has not awarded single coal or lignite block for captive use to private companies since October 2008.
The coal ministry decided to initiate auction by putting the list of blocks on its website. Information on estimated reserves, exploration status and environmental clearances would also be provided.
The ministry’s objective is to avoid double bidding for power companies that after January 2011 have to participate in tariff-based bidding to bag power supply contracts from states.
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