By Anurjay Dhal
RAJKANIKA/KENDRAPARA(ODISHA): No chance of aggressive bidding in coal sector as it was seen in case of Iron, Ore, Manganese and Chrome blocks in Odisha’s mineral rich Keonjhar, Sundargarh and Jajpur districts, when Naveen Patnaik led Government went for auction of 23 blocks and mines owners too went to above 180% premium. The Coal Ministry in its 2 consultation meets at Kolkata and Mumbai held in last February, had made it abundant clear that there will be no aggressive bidding for coal blocks.
Sources in Odisha Government however informed over phone from Bhubaneswar, about 120 km from here, that backed by new laws, leading merchant mines owners are eagerly waiting for the month of July as Union Coal Ministry will go for auction for Coal blocks inviting private players to participate in bidding.
Odisha , which houses 79,295 Million ton of coal deposits, is the second most Coal bearing State in the Country while India is the 5th biggest coal bearing Nation in the World. In past, Odisha Government only auctioned 1 coal block-Jamkhani, which had won by Anil Agarwal’s Vedanta Limited. The Coal Ministry is auctioning as many 27 blocks.
Odisha has hiked it coal production by 23 % in last 5 years, while National Coal Production increased by 24 %. Out of the 27 Coal Blocks, 21 have been reserved for auction to all Non Regulated Sectors, such as Steel, Cement and 6 Coking Coal Mines for Iron Ore and Steel. In case of allotment, 5 Coal mines are for Power sector, 9 for sale of Coal and 1 for Iron and Steel. India’s coal production was 730.54 Million ton during 2018-19 with a growth of 7.9 %
Private players like Rungta Mines Limited, Jindal Steel and Power Ltd, JSW Steel-Energy, Essel Mining and Industries Ltd, Tatas, Sesa Goa, Vedanta Industries Ltd, Adani Group and global players like Rio Tinto, BHP Billiton, PesBody, Glencore and Vale are among those eyeing on Odisha’s Coal block, sources said.
In order to address the concerns of the potential bidders, the Coal Ministry had conducted pre-bid consultations stakeholders in Kolkata and Mumbai in February this year. Based on the suggestions received, the government has now agreed to ease bidding conditions that would form part of the document that would go for Cabinet approval, media reports said.
A source said that government is considering allowing a composite route for potential bidders of commercial coal mine and offer simultaneous prospecting and mining lease to bidders to ensure certainty on the investments made by the bidders. This would also prevent companies from making aggressive bids that put the company in a difficult financial situation at the production stage.
Draft auction guidelines have proposed a floor price of 4% of revenue share for the auction and bids are to be accepted in multiples of 1% of the revenue share till the percentage of revenue share is up to 10% and thereafter bids would be accepted in multiples of 0.50% of the revenue share. This may be reduced to facilitate ease of bidding and true price discovery, media reports said.
The commercial mining auctions could see in all 15 large Coal blocks with an annual production potential of 5-10 million tonnes being put up for bidding in phases. The reserves in five of these mines could be in excess of 500 million tonnes. These could fetch anywhere between Rs 5,000 and 6,000 crore to the State government. However, in all 80 blocks would be put under the hammer in phases that would also include smaller mines.
