Firms with ready projects to get priority in coal allocation

Last Updated: Thu, Dec 27, 2012 19:02 hrs

The government will give priority in coal block allocation to power and steel companies setting up projects in fuel-starved states. Also, companies with end-use projects nearer to commissioning would be considered first for allocation under the new competitive bidding guidelines for coal blocks, the coal ministry said.

The evaluation criteria, finalised by the inter-ministerial committee for allocation of coal blocks to government companies, is based on a 30-point system. Of the 30 points, highest nine have been assigned for “preparedness of the plant awaiting coal allocation”. This includes evaluating whether in-principle approval has been obtained for the project, land acquisition, water allocation and approval of terms of reference of the project by the environment ministry.

The next evaluation criteria in the list is “demand and supply gap of the state” during the 12th and the 13th Plan periods. This implies that companies setting up projects in states with higher coal shortage are more likely to be allocated reserves. Nine points have been assigned for this criteria.

Further, six points have been assigned for the criteria “company’s financials”. This includes four points for networth and two points for turnover of the company. Three points have been assigned for the progress of development of blocks allotted in the past to the applicant company. The last three points have been kept for location of the plant – pithead plant or those located within a distance of 100 km from the block will be given priority.

The coal ministry had notified the Auction by Competitive Bidding of Coal Mines Rules, 2012 in February. The rules outline guidelines for competitive bidding of blocks, but exempt government companies and power projects bid out on tariff-based bidding for supply of power from bidding. Blocks will be allocated to government companies based on a reserve price to be set by the Centre.

The state government will choose one of the government companies based on certain criteria. The coal ministry has worked out two separate drafts of the terms and conditions – one for mining companies and the other for companies with end-use projects.

The new auctioning guidelines are being framed in the backdrop of the recent allegations against the government of extending undue financial gain worth Rs 1.8 lakh crore to companies by not resorting to bidding for auctioning of coal blocks in the past.

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