According to a blueprint prepared by the finance ministry, a special purpose vehicle (SPV) would be created for developing coal blocks in the country on public private participation (PPP) model.
The government has identified 10 cluster blocks for development under PPP model and the SPV would be set up for each of these clusters.
State-run Coal India (CIL) would be hold majority share or 51 per cent in these SPVs while the successful private bidder will hold the rest of the equity, and would be liable for all obligations and financial responsibilities.
These 10 cluster blocks would be auctioned through a two-stage bidding process. The winner among private firms would be the bidder that offers the best “blended payment structure” involving both profit-sharing and revenue-sharing with the government.
At the time of signing the contract, the winning bidder will have to submit a premium up front and this would be kept in a ‘lock-box account’ operated by the PPP trustee.
Pricing structure can incorporate profit-sharing in a strictly defined and non-changeable 2-3 years which will then convert into revenue-sharing. This should incentivize private players to move faster towards mine production.
Leave a Reply
You must be logged in to post a comment.