Advertise Here [728px W x 90px H pixels]
Infrastructure Today Magazine | Cabinet Approves Coal Blocks Allocation Rules
Cabinet Approves Coal Blocks Allocation Rules
May 21, 2020
The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, approved the methodology for auction of coal and lignite mines or blocks for sale of coal and lignite on revenue sharing basis and increasing the tenure of coking coal linkage on Wednesday.
The new methodology provides for revenue sharing as the parameter for bidding. The bidders would be required to bid for a percentage share of revenue payable to the government. The floor price shall be 4 per cent of the revenue share. Bids would be accepted in multiples of 0.5 per cent of the revenue share till the percentage of revenue share is up to 10 per cent and, thereafter, bids would be accepted in multiples of 0.25 per cent of the revenue share. There shall be no restriction on the sale and utilisation of mined coal.
The methodology is oriented to make maximum coal available in the market at the earliest and it also enables adequate competition which will allow discovery of market prices for the blocks and faster development of coal blocks. Higher investment will create direct and indirect employment in coal bearing areas especially in mining sector and will have an impact on economic development of these regions.
The successful bidder shall be required to make monthly payments that shall be determined as product of the percentage of revenue share in the final bid, quantity of coal on which the statutory royalty is payable during the month and notional price or actual price, whichever is higher.
The upfront amount shall be 0.25 per cent of the value of estimated geological reserves of the coal mine payable in four equal instalments. However, the upfront amount payable shall be as per actual calculation as per above method or as per ceiling mentioned here below, whichever is lower.
FICCI Lauds Move
In an official statement, the industry chamber FICCI lauded the government’s efforts to promote reforms in the coal sector said that that this measure would give a big push to the auctioning of coal blocks for commercial sale. The government is planning to auction 50 coal blocks in the first phase for commercial mining on revenue sharing basis based on the National Coal Index setup by the Ministry of Coal in this regard after removing the entry barrier. This is likely to also help in attracting investments from Indian and foreign corporations.
The statement added that the new methodology was a major step towards realising the government’s target to completely stop coal imports by power plants by 2024. In this endeavor, modern, efficient, sustainable mining with cost effective evacuation will help in transforming the coal sector, creating employment and enabling downstream power and other core industries to become more efficient in serving India’s needs. FICCI also welcomed plans to invest Rs 500 billion for coal evacuation infrastructure as several mines are located in areas where transportation is a challenge.
The statement also said that many of the positive aspects of the new regime for coal mining that were notified by the Coal Blocks Allocation (Amendment) Rules, 2020, can be suitably applied to the minerals sector as well. This includes the provisions related to private participation for exploration, composite licensing, revenue sharing mechanism and no restriction on sale for end use. The provisions like removal of entry barrier for participation in auction of mines and incentivising production ahead of schedule will potentially attract more private investments. Hence, a single regime for coal and minerals sectors will prospectively maximise production and revenue.
Cabinet Committee On Economic Affairs
Prime Minister Narendra Modi
Advertise Here [468 W x 60 H pixels]
YOU MIGHT ALSO LIKE
Leave a comment