Recently coal mining in India has been metamorphosed as far as the policy framework is concerned. From an earlier restrictive model, we have moved on to granting coal mining blocks pursuant to a competitive bidding process, and from prescribing specific end-use to permitting commercial sale of coal. The auction-based regime introduced in 2014 allowed private sector participation, however it was limited to captive usage in own end use plants. Now, the sector has been opened up for commercial coal mining by private players in 2020 and first ever successful auction of commercial mining was launched by the Hon’ble Prime Minister on 18.06.2020 and concluded with allocation of 19 coal mines.
Commercial coal block auctions are conducted in a two-stage online bidding process, which involves technical screening and submission of competitive initial price offer in the first stage, and a second and final stage where better price offers are intended to be received.
Commercial coal mining auctions are completely different from the earlier regime of restricted sectors, use and price. Now, there are no such restrictions at all. The auctions have terms and conditions which are very liberal, allowing new companies to participate in the bidding process, reduced upfront amount, adjustment of upfront amount against royalty, liberal efficiency parameters to encourage flexibility to operationalize the coal mines, transparent bidding process, 100% FDI through automatic route is allowed and reasonable financial terms and revenue sharing model based on the National Coal Index.
In the 1st ever tranche of commercial auction, 38 mines were put on offer and 19 mines were successfully auctioned. The 1st tranche of auction would help in creating nearly 69,000 jobs and an investment of over Rs. 7,650 crore for the states. For the subsequent round of auction for commercial mining i.e. 2nd tranche, a total of 67 coal mines are being offered of which 37 are fully explored and 30 are partially explored blocks. The mines on offer are geographically spread over the coal bearing States. To cater to the demand of the coking coal consumers, 6 coking coal mines have also been put on offer. The auction is conducted on MSTC Web portal as given below.