The Coal Ministry has invited suggestions from stakeholders on draft guidelines for competitive bidding

Keen to adopt a transparent method for auctioning coal assets, the government has asked the Central Mine and Planning Design Institute (CMPDI) to hire a consultant to advice it on the methodology for putting up around 50 to 60 coal blocks under competitive bidding process.

The first lot of coal blocks for competitive bidding is expected to be thrown open to bidders in the next four to five months. The bids for hiring a consultant for the new process have already been received. The government last month had come out with guidelines for competitive bidding of coal.

“CMPDI is currently engaged in the task of finalising a consultant for putting in place a methodology for fixing the floor price/reserve price of around 50 to 60 coal blocks and finalising the bid document and assisting in conducting the bid,” a senior official said.

The auction will be done by the Centre after fixing a minimum price for blocks on offer.

At present, coal blocks are offered to the end-users on a preferential basis by an inter-ministerial screening committee.

The Coal Ministry had sought suggestions from stakeholders on draft guidelines for competitive bidding. The proposal for auctioning coal blocks through competitive bidding was mooted three years ago. Parliament had also approved amending the MMDR Act to facilitate this process in 2011. “Keeping in mind the poor record of making operational the coal mines, it is felt that the best method would be to go for competitive bidding process,” the official said.

Around 216 blocks with geological reserve of 50 million tonnes have been allocated to various public and private companies. However, the progress on these blocks has not been very encouraging.

Under the new rules, offers will be invited through auction from companies engaged in the business of specified end-user. They will be required to submit technical and commercial bids. With regard to allocation of blocks to PSUs, the Centre will identify areas and fix a reserve price. The Coal Ministry said it would circulate to states and the Power Ministry of areas containing coal for inviting application from eligible government companies for allocation of blocks. The state governments shall select a company or corporation on the basis of competitive bids for tariff and recommend for allocation of area containing coal to such company or corporation, the rules state.