India Inc, bidding for coal blocks, now faces a unique problem. Companies, which have so far managed to get coal blocks on an adhoc basis, are finding it a bit hard to decide which one to bid for among the 92 odd blocks shortlisted by the ministry.
This has thrown open a new playground for consultants such as PricewaterhouseCoopers, Deloitte and Crisil. They are now being approached by corporates looking to participate in the forthcoming auction scheduled for January, multiple sources told dna.
With the sole specialised body, Central Mine Planning and Design Institute Ltd (CMPDIL) turning out to be untouchable and also being appointed as a consultant for the ministry, desperation is high among the corporates in search of new consultants.
"We have received many requests from companies for acting as consultants on the coal block auction. But since we have been appointed by the government to give our expertise and partner with the government on the planning of the auction, we had to turn them away," said an official of CMPDIL, which is a consultancy subsidiary of Coal India but allowed to take up outside assignments.
Crisil Infrastructure Advisory Services is another consultant with necessary expertise, and had earlier helped CMPDIL on methodology for fixing reserve price, model tender document and draft agreement under the auction by Competitive Bidding of Coal Mines Rules 2012.
The consultants in demand are helping corporates prepare initial technical study of all the mines notified by the government based on reserve size, grade of coal, strip ratio, nature of mine, i.e open cast or underground. They would then short-list suitable mines that meet the individual company's requirement for further study.
Take the case of aluminum producer Nalco, which run Asia's largest integrated complex having bauxite mines, refinery, smelter and captive power plant in Odisha.
The 1200 MW capacity coal-based captive power plant which caters to its aluminium smelter, also was sourcing coal through long-term fuel supply agreement with Coal India and partly through e-auction coal and imports.
Nalco was allocated Utkal-East coal mine, which it had been developing since 2004, for meeting coal requirements but it was de-allocated. The public sector aluminum producer now plans to participate in the ensuing auction to ensure fuel security, but is not quite sure on how to go about it and select which mine to bid for.
The company is in the process of selecting a consultant which would decide on investment requirement for development of each short-listed mine to enable the corporation for taking investment decision.
"This activity would capture the capital cost in terms of exploration status and investment required for further exploration, investment for development of mining infrastructure, cost of land acquisition among other things," Nalco official said.
The assessment would also involve creating financial model of each short-listed mine, capital investment and operational investment requirement, calculating cost of production of coal and its cost at the end-use plant.
Not only that, the consultant would also be asked to advice whether to participate in auction at all after a comparative analysis compare the cost of coal if sourced through long-term coal linkage from any of the subsidiaries of CIL.
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