Government May Reduce Upfront Payment For Larger Coal Blocks To Attract Investors
The government is mulling reducing the upfront payment for larger coal blocks to attract global and domestic investors to the coal sector, according to sources.
The matter had come up for discussion during the meeting of a high-level committee under the chairmanship of NITI Aayog Vice-Chairman Rajiv Kumar last month, sources privy to the development said.
"During the meeting, it was discussed that for larger blocks the upfront payment was more. So in order to attract investors, it was opined that the upfront payment should be reduced," the source said.
Besides Kumar, the high-level committee consists of Niti Aayog CEO, Cabinet Secretary, Mines Secretary and Coal Secretary among others. The panel has been constituted to look into the overall improvement of the coal sector, the source added.
The government is planning to begin the auction for commercial coal mining by the end of next month, the source said. Of the 11 blocks that have been identified to go under the hammer for commercial mining, around five are big mines, the source said.
In the 10th auction of coal mines, only one coal block was sold. Vedanta Ltd. had grabbed Jamkhani coal block in that auction. In the eighth tranche, five blocks were auctioned. Birla Corporation Ltd., Jindal Steel And Power Ltd., Prakash Industries Ltd. and Powerplus Traders Pvt Ltd were the successful bidders.
The Supreme Court in September 2014 cancelled allocation of 204 coal mines to different government and private companies under the provisions of Coal Mines (Nationalisation) Act, 1973.
To bring transparency and accountability, the government brought out the Coal Mines (Special Provisions) Act 2015 which provides for the allocation of coal mines by way of auction and allotment for the sale of coal.