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Tatas, Essar, Lanco eye coal block auction

Friday, 9 May 2014 - 6:05am IST | Place: Kolkata | Agency: dna

Three mines in West Bengal, Jharkhand have been put up in the first such auction in the country

Tatas, Essar group and Lanco are among the large business houses that have shown interest in acquiring three coal mines put up for sale by the coal ministry.

The auction is the first in India is a departure from earlier practice of allocating coal blocks, which is under investigation by law enforcement agencies.

The mines on block are Jhirki in East Bokaro Coalfield, Tokisud-II of South Karanpura Coalfield in Jharkhand and Andal Babuisol mine of Raniganj Coalfield in West Bengal.

"The response has been quite encouraging with about 32 entities, including large corporate bodies who are in the process of visiting the sites," A K Debnath, chairman and managing director of Central Mine Planning & Design Institute Ltd (CMPDIL), told dna.

The site visits which started on Monday would continue till Wednesday, he said.

CMPDIL, a subsidiary and consultancy arm of Coal India Ltd, has been entrusted with the responsibility of estimation of reserves of the mines, preparation of geological reports and selection of the bidders.

With a view to improve long-term coal availability, the ministry had earlier decided to offer coal blocks for specified end uses under the Auction by Competitive Bidding of Coal Mines Rules 2012.

Following this, the three blocks, having total reserves of 500 million tonne (mt), were selected. Jhirki block having a reserve of 267.91 mt can be mined for steel production, Babuisol mine with 103.841 mt for sponge iron and Tokisud-II block with a reserve of 127.69 mt for cement.

About 36 parties had responded after the coal ministry floated the Request for Proposal in February and meetings were held with in March to get their views before the actual tender is floated.

The RFQ document has now been tweaked a bit following these interactions, including an important change involving the norm of allowing the maximum number of partners in a consortium, which was made more liberal.

"The limit on maximum number of partners in a consortium has been raised from four to six entities. This has been done following request from the prospective bidders," Debnath said.

Accordingly, the minimum shareholding norm for each consortium member has been halved to 10%, while retaining the minimum limit for the lead member at 26%.

During the bidding there would be a floor price, which would be on a per-tonne basis, and the bidders are required to bid above that.

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