India will soon begin auctioning coal blocks for commercial mining purposes, as the Union cabinet headed by Prime Minister Narendra Modi on Wednesday approved a methodology that puts an end to the state-run monopoly of Coal India.
“The auction methodology based on revenue-sharing model has been approved by the Cabinet,” sources said, adding the formal announcement is likely to be made soon.
They said that the auction of some 50 coal blocks, including some large mines, will be launched very soon.
ET reported on Monday that the government is likely to offer major revenue share rebates to commercial coal block auction winners in order to attract investment from local and global miners in the midst of the coronavirus pandemic.
With easy entry and exit rules for commercial coal auctions, the government expects the participation of Indian companies such as Hindalco, Jindal Steel & Power, JSW Energy, Adani Group and Vedanta, as well as global miners such as Peabody, BHP Billiton and Rio Tinto.
Companies starting early block production will be offered a 50 per cent rebate on the revenue share payable to the government. The rebate will start from the day of production until the scheduled start date of the mining operation agreed at the time of the block award, sources said.
Similarly, it is proposed that a rebate of 50% of the revenue share be granted to coal produced in excess of the planned target for the financial year. A further 20% rebate on the revenue share of coal used for gasification or liquefaction purposes is proposed, they said.
Finance Minister Nirmala Sitharaman announced on Saturday the opening of 50 blocks of commercial coal mining in the fourth installment of the Government's Rs 20 Lakh Crore Atma Nirbhar Bharat stimulus.
Sitharaman had said that there would be no eligibility conditions for participating in coal auctions and that any firm would be able to bid by making an upfront payment. For the auction, a floor price of 4% of the revenue share is proposed.
