Date:24/07/2007 URL: http://www.thehindubusinessline.com/2007/07/24/stories/2007072452121000.htm

Back GoM clears competitive bid-based allocation of coal blocks

‘Move will make the process more objective, transparent’

Review
Mines Ministry will soon move a proposal to the Cabinet before the Bill is introduced in Parliament.
In the existing system, Coal Ministry allocated blocks after clearance from an Inter-Ministerial Screening Committee.
50 of the 229 coal blocks identified so are being processed for allocation.

Our Bureau

New Delhi, July 23 The Group of Ministers (GoM) headed by the Home Minister, Mr Shivraj Patil, has cleared the proposal for competitive bidding-based allocation of coal blocks.

“Following the GoM’s go ahead, the Mines Ministry will soon move a proposal to the Cabinet before the Bill is introduced in Parliament for competitive bidding-based allocation of coal blocks,” an official in the Coal Ministry told Business Line.

In the existing system, the Coal Ministry allocated blocks after getting clearance from an Inter-Ministerial Screening Committee.

‘For transparency’

“The process of allocating coal blocks through competitive bidding instead of getting an Inter-Ministerial Screening Committee to earmark them is a move aimed at making the process more objective and transparent,” the official said.

The Coal Ministry earlier moved a proposal for amending the Coal Mines Nationalisation Act for introducing competitive bidding for allocations of blocks. However, it was decided later to amend the Mines and Minerals Development and Regulation Act 1957 so as to make competitive bidding applicable to all minerals, including coal.

The official added that with the demand for coal increasing sharply, the number of applications from both the public and private sector has gone up, making the allocation difficult and vulnerable to criticism.

Allocation

Out of the 229 coal blocks identified so far, 160 blocks have been allotted to private and public sector companies and another 50 are being processed for allocation.

“The broad proposals include that after the technical bids are scrutinised, the blocks would be allotted to the highest bidder against the offer of a lump sum payment. Five per cent price preference will be given to the applicants proposing to set up an end-use plant in the State where the coal block is located,” the official said.