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Covid curbs may further push back auctions for commercial coal mines

Covid curbs may further push back auctions for commercial coal mines

The government may push back the bidding for commercial coal mines as the Covid-19 pandemic continues to restrict free movement while the investors want more time to place their technical bids based on site visits and evaluation.

Official sources said that though no formal request has come so far from the investors seeking further extension of the bidding dates, it is likely that this may become an issue in the regular query the auction process has generated from the interested parties.

Ever since initiating the e-auction process for commercial coal mines on June 18, the government has already extended the dates for submission of technical bids once. Now the last date for submitting a technical bid is by 2 pm on September 29 while the e-auction would be carried out for the qualified bidders between October 19 and November 9.

But a few investors have raised the query as to how technical bids could be placed at such a short notice when investors would need at least 45-60 days to evaluate a mine before placing their bids.

"But this leaves us with very little time. The travel restrictions and lockdown in various parts of the country is not helping either. So at least the bidding should be postponed till the end of the year," said an investor keenly evaluating the coal mines that the government is offering for the first time to the private sector for commercial extraction.

The government announced bids for commercial coal mining rights on June 18 when Prime Minister Narendra Modi launched the auction process for 41 coal mines. Before this, the coal sector has been a regulated one where state-owned Coal India Ltd almost enjoyed a monopoly position with the private sector getting coal blocks only for captive operations.

In all the 41 mines with a total geological coal reserve of 17 billion tonnes are on offer under the first phase of commercial coal mine auctions. These include both large and small mines with peak rated capacities (PRC) ranging from 0.5 to 40 million tonnes per annum (mtpa) of coal.

The cumulative PRC of all the mines is 225 mtpa. Of these, the Centre is withdrawing one mine of Bander in Maharashtra as it falls under the eco-sensitive zone and is also considering the Chhattisgarh government's request to replace four coal blocks marked for auction for commercial mining.

The mines on offer are largely fully explored, meaning that it could be brought to production immediately. Moreover, four upcoming coal mines are in offer that could provide input to the steel sector.

The mines are located in five states since the auctions started in Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra and Odisha. Commercial coal mining auctions are completely different from earlier regimes of restricted sectors, use and price. Now there are no such restrictions at all.

The coal block auctions have so far received good response from the investors with a lot of inquiries coming from both Indian and global mining, metal and energy companies..