Cabinet approves Methodology for allowing the allocate of coal mines
No: --- Dated: Feb, 19 2019
The Cabinet Committee on Economic Affairs, chaired by Hon'ble Prime Minister Shri Narendra Modi has approved the methodology for allowing the allocatee of coal mines for specified end use or own consumption to sell 25% of actual production on ROM basis in open market with payment of additional premium on such sale under the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957.
This new methodology provides that, in case of coal mines earmarked for specified end uses or own consumption, the allocatees are mandated to utilize a minimum of 75% of its actual production (ROM basis) in specified end-use plants and are allowed to sell up to 25% in the open market. In case of auctions, the successful bidder shall be required to pay an additional premium of 15% of its final bid price on per tonne basis, for the actual quantity of coal sold in open market. The additional premium will be over and above the final bid price. In the case of allotments, the successful allottee shall be required to pay an additional reserve price of 15% of the Reserve Price, for the actual quantity of coal sold in the open market. The additional reserve price will be over and above the Reserve Price.
This methodology attempts to address the issue of lack of response from the bidders during the earlier tranches of auction/allotment under the Coal Mines (Special Provisions) Act, 2015.
The methodology will give certain flexibility to allocate in cases of change in the economic situation, business cycle, End Use Plant requirement etc.
It is expected to make the on-going and future tranches of auction and allotment attractive and commercially viable and may increase the competition in the auction process.
It is also expected to increase competitiveness and tine higher investment should create direct and indirect employment in coal bearing areas especially in the mining sector and will have an impact on the economic development of these regions.
Background:
Presently, the allocatee of coal mines for specified end use or own consumption is not permitted to sell coal in the open market. As per existing conditions, any coal which is extracted in excess of the requirement of the Bidder in terms of conditions of Tender Document is required to be supplied to CIL at the CIL Notified Priceless 15 per cent of such CIL Notified Price (to take care of CIL handling expenses with respect to such coal). Also, such sale should not exceed 50% of the annual coal production from the mine.
Courtesy – Press Information Bureau, Government of India