Government To Finalise Revamped Rules For Coal Mine Auctions

India is finalising revamped rules that govern coal auctions, an official said on condition of anonymity, as it aims to attract more bidders after poor response to recent auctions.

The move gains importance as thermal power plants—or those that generate electricity by burning coal—meet nearly three-fourths of India’s energy requirements. At least two recent coal auctions were cancelled after no bidder evinced interest. The official, while blaming the poor response on strict conditions, said the government is confident of holding fresh coal mine auctions this fiscal based on the new rules.

A high-powered committee chaired by former Central Vigilance Commissioner Pratyush Sinha, the official said, has made relevant recommendations in a report submitted to the government. The official said that the coal mine auctions weren’t held as they were awaiting the committee’s suggestions. The official said that the report—which is now with the cabinet secretary—needs to go to higher levels. Some of the committee’s recommendations will need approval from the cabinet.

In February, the government allowed private and foreign companies to bid for coal mines without any end-use or price restrictions as the government cleared new auction guidelines to boost supply of the fossil fuel.

The measures the government is contemplating to open the coal sector include:

• Reduce the minimum number of bidders during coal mine auctions.
• Lower the upfront payment needed for the process.
• Reduce the quantum of bank guarantee for bidders.

A panel led by Sinha had recommended an overhaul of norms, including easing of bank guarantees, bidding on revenue-share basis and allowing captive mines to sell 25 percent of the production in the open market, The Economic Times had reported in July citing sources.