The government is planning to build a consensus on the modalities for coal block auctions post its deallocation, as it feels any hush-hush job done would only create moral hazards and allegations of impropriety.
It has decided to consult stakeholders including industry associations like FICCI, CII, Assocham and also coal and power producers' associations on ways to undertake coal block auctions.
The inter-ministerial group formed for this purpose has been asked by the coal ministry to "consult industry stakeholders, industry bodies like FICCI, CII, Assocham, Coal Producers' Association, Steel Makers' Association, Cement Producers' Association etc in order to ascertain their views on the procedure and methodology of auction of coal blocks," a letter issued to the members of the IMG said.
Industry body Assocham on Wednesday suggested the Prime Minister's Office that preferences be given to captive block allocatees having operational or soon-to-be operational end-use project. Auctions should be opened for other parties only after securing coal for these projects, it suggested.
In a note given to the PMO, Assocham suggested that blocks earlier allotted for end-use power projects should be auctioned only among power companies.
The government would be undertaking host of factors to determine "intrinsic value" of the mines to be auctioned. These include the cost of acquisition of land, money spent on rehabilitation, written down value of capital expenditure and additional capex required for sustaining target production, operating costs for running the mines incurred in FY14, manpower employed, sale or transfer price of coal among others.
In a letter sent to the allottees of 74 blocks, which is likely to be auctioned in the round one in December, the coal ministry has listed out all the parameters to be used for arriving at the intrinsic value of the mines for which relevant data has been sought to be submitted within 15 days.
For determination of the valuation, the government would use data like year-wise and cumulative production till March 2014 and for FY15; cost of land acquired for mine and infrastructure; cost incurred on rehabilitation and re-settlement; net present value of compensation for forest land; investment in other infrastructure like mining equipment, coal handling plants, washery and rail sidings, underground transport systems for underground mines; written-down value and additional expected investment for sustaining target capacity; details of operating costs including outsourcing costs.
These apart, sources of fund, quality of coal produced and its sale or transfer prices and also mine closure costs, if any, are to be made available.
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