Union Ministry of Coal on 17 December 2014 notified the draft rules for e-auction of 92 cancelled coal mines in first phase. For this, government fixed a floor price of 150 rupees per tonne for sectors like captive power, steel, sponge iron and cement.
The draft notification was issued in accordance with the Coal Mines (Special Provision) Ordinance 2014 wherein the Nominated Authority was required to prepare a tender document. Accordingly, Union government prepared an approach paper for public consultation and has sought comments from stakeholders by 22 December 2014.
As per the draft notification
- The e-auction may be conducted on forward/reverse basis, depending on the end-use industry.
- The forward bidding will be used for production of iron and steel, generation of power for captive use and cement while reverse bidding will be used for generation of power.
- Applications will be sought from intending companies in these sectors for pre-qualifications and only the top 50 per cent of the pre-qualified bidders will be allowed to submit their bids.
- The indicative price offer shall be bid price per tonne of the coal produced. Such bid price shall be above the floor price in case of forward bidding or below the ceiling price in case of reverse bidding.
- The Intrinsic Value of the coal block will be calculated by computing its Net Present Value, based on the Discounted Cash Flow method. 10 per cent of the Intrinsic Value will be payable upfront.
- On fixing the ceiling price for coal mines to be auctioned for power projects having cost—plus power purchase agreements, a ceiling price of the prevailing CIL notified price for each coal mine will be fixed and the bidder will be mandated to quote lower than this ceiling price.
- A fixed reserve price of 100 rupees per tonne of coal shall be payable, as per actual production by the mine allottee.
- For power plants having uncontracted capacity, the bidder shall be restricted to cap its merchant capacity at 20 percent of the installed power capacity linked to the alloted coal mine. The reserve price in such cases shall not be less than 150 rupees per tonne.
The draft notification will pave the way for auction and allotment of 214 coal blocks cancelled by the Supreme Court in September 2014.