CCEA approves methodology for auction of coal & lignite mines/ blocks
- Posted By
10Pointer
- Categories
National
- Published
26th May, 2020
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Context
- The Cabinet Committee on Economic Affairs approved the methodology for auction of coal and lignite mines or blocks for sale of coal or lignite on revenue sharing basis and increasing the tenure of coking coal linkage.
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What is the methodology?
- This methodology provides that bid parameter will be on revenue sharing basis. The bidders would be required to bid for a percentage share of revenue payable to the Government.
- 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 percent 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 or utilization of coal from the coal mine. The floor price shall be 4 per cent of the revenue share.
- Successful Bidder shall be required to make monthly payments which shall be determined as product of percentage of revenue share (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 4 equal installments.
- However, the upfront amount payable shall be as per actual calculation as per above method or as per ceiling mentioned here, whichever is lower.
- Tenure of coking coal linkage in the non-regulated sector linkage auction has been increased upto 30 years.
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Are there any ceilings?
- Yes. If Geological Reserves in mine upto 200s tonne, the upper ceiling of upfront amount will be Rs. 100 crore.
- If Geological Reserves in mine is over 200 tonnes, the upper ceiling of upfront amount will be Rs. 500 crore.
- It also permits commercial exploitation of the CBM present in the mining lease area.
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Why this methodology?
- 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.
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How is this going to help government as well as miners?
- This methodology provides incentives to the successful bidder by way of offering rebates in revenue share in events of early production of coal from the coal mine and the total quantity of coal consumed or sold or both for gasification or liquefaction on an yearly basis from the coal mine.
- As the entire revenue from the auction or allotment of coal mines would accrue to the coal bearing States, this methodology shall incentivise them with increased revenues which can be utilised for the growth and development of backward areas and their inhabitants including tribals. States in Eastern part of the country will be especially benefited.
