Block winners can use coal at any plant now

KOLKATA: Successful bidders of the current round of coal block auctions can use extracted coal at any of their plants including those at subsidiaries, provided the end-use plant is similar to the one specified during the auction. Earlier, operators were tied to the plant specified during the auction.
The Centre, however, has rejected prospective bidders’ request of selling coal to Coal India at notified prices for the non-regulated sector, which is almost 20% higher than notified. They asked for a higher price as this round of auction was for the non-regulated sector — for which Coal India charges higher.

Initially, the Centre had said that sale to Coal India will be at a discount of 15% on the notified price for sectors other than power utilities. Subsequently, they clarified that such a sale will be at a discount of 15% over the notified price for the power sector as well, offering Coal India over 20% margin for selling this coal in the open market. A block operator can sell up to 50% of their produce to Coal India in a year.

Utilisation of coal at any other plant by the bidder would, however, be subject to the ministry’s scrutiny and prior approval from the Centre. “The block operator needs to inform the government at least 30 working days before it starts to divert coal to any other plants,” a senior executive from a prospective company said.

Under the current round of auction, the government has offered to auction 27 blocks under three tranches — 8th, 9th and 10th — and successful bidders can sell 25% of the produce in the open market.


Three dozen companies, including Reliance Cement, UltraTech Cement, Balco, Ambuja Cements, JSW Steel, Tata Steel, Hindalco Industries, Birla Corporation, ACC Cement and Vedanta are prospective bidders for the current round.

Out of the 27 blocks on offer, 20 mines are estimated to hold an extractable reserve of 1 billion tonnes. According to mining plans, these blocks can produce a total of 36 million tonnes a year, of which 9 million can be sold in the open market.

Financial biddings are to be held between October 10 and November 8. Final allotments are likely to happen by November 11.