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Coal block allocations set to be delayed

Thursday, 14 February 2013 - 9:00am IST Updated: Wednesday, 13 February 2013 - 11:56pm IST | Place: Mumbai | Agency: dna

The government appears set to miss the March deadline for allocation of 17 coal blocks to various public sector undertakings (PSUs) and state mining corporations.

The government appears set to miss the March deadline for allocation of 17 coal blocks to various public sector undertakings (PSUs) and state mining corporations.

Though an inter-ministerial group has set evaluation parameters for shortlisting the players – as many as 78 are in queue for the 17 blocks – the reserve price is yet to be decided.

Going by industry insiders, Crisil, which had bagged the mandate for discovery of the reserve price, is yet to come out with the formula.

“In May 2012, through a tender process, Crisil was assigned to provide the formula for identifying the reserve price for explored, semi-explored and unexplored coal blocks within three months. It has been more than nine months since then, but there is no word from either Crisil or the coal ministry,” said the CEO of a mining consulting firm, which has been involved in over half-a-dozen coal block allocations in the past.

The reserve price is important for evaluating the financial capability of the interested players to develop the blocks and Expression of Interest can be invited only once this is known.

Crisil refused to participate in this story saying it does not disclose client or engagement-specific information. Thus, the reason for the delay, the methodology being followed for the calculating the reserve price and whether geological reports were made and assessed before calculating the reserve price – these blocks are located in different geographical locations – could not be ascertained.

To be sure, the time line for processing of applications for coal block allocations was earlier extended to February 8 from January 30.
This is the first time the government is allocating coal blocks under the amended Mines and Mineral Development and Regulation Act. Part of the blame for the delay also lies with the government.

As per coal ministry website, many of the central government ministries and state governments concerned have not named nodal officers for coordinating and supervising the allocation exercise. A reminder was sent out on February 6 by a director in the coal ministry to the Planning Commission and chief secretaries to appoint nodal officers to fast track the process.

India has around 118 billion tonne of coal, which could be mined, but managed to produce only 540 million tonne in 2011-12. Of this, 436 mt (81% of the total output) came from Coal India.

Incidentally, the country imported 71.05 mt thermal coal and 31.80 mt coking coal last fiscal, up nearly 50% on year.

“Though the quantity of imported coal was roughly a fourth of Coal India’s production, in value terms, it was almost equal to Coal India’s topline as the price of international coal (D grade) was $67 higher  than the Coal India price,” said the CEO of a reputed coal importer.

Early allocation of coal blocks and timely production from those allotted are, therefore, imperative.


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