Fimi urges coal ministry to fast-track auctions of Schedule II blocks

Topics coal blocks

In view of the spike in coal imports, Federation of Indian Mineral Industries (Fimi) has urged the Ministry of Coal (MoC) to hasten the auctions of Schedule II coal blocks.

"There is an urgency to augment domestic coal production on fast track basis. In the list of coal blocks earmarked for commercial sale of coal, there are few Schedule-II mines which can be brought to production within few months time. MoC should bring all such Schedule-II mines for auction under the first tranche”, Fimi reasoned.

The country has witnessed a consistent surge in coal imports. During 2018-19, 235 million tonnes (mt) of coal including coking coal was imported. In the current fiscal, coal imports are forecast to surge further. Since the country imports a significant quantum of coal imports, much of the foreign exchange is spent on buying coal. 

In its submission to the 'Discussion Paper on Auction of Coal Mines for Sale of Coal', Fimi suggested that coal blocks which were already operating and categorized under Schedule II category (like Gare Palma IV/1, Gare Palma IV/7, etc.) which have not been auctioned so far be considered for auction under first tranche.

Moreover, Fimi recommended that coal blocks with severe surface constraints like railway line, HT (High Tension) powerline, perennial water streams, National Highways, heavily built up areas, sensitive areas, etc should be avoided. Such constraints are expected to delay the approval process and hence decelerate the block development.

“While offering coal blocks for auction under Commercial sale of coal, MoC should assess the possibility of amalgamating adjacent coal blocks having underground mining potential and having coking coal reserves. By doing so precious resource can be saved and could be mined which otherwise be blocked under the barriers left between two adjacent properties. Also, amalgamating two blocks identified for underground coal mining may justify capital investment due to increase in resources, extent of mine and justify deploy of latest technology and modern mining methods which will also reduce overall gestation period considerably”, it added.

Commenting on the response to online coal auctions, Fimi opined that where the total number of technically qualified bidders is less than two, then the nominated authority may decide to continue with the auction process with negotiated set of terms and conditions at the reserve price basis. A coal block may not be lucrative to other bidders due to location, logistics, commercial angle and other factors and there could be only one bidder interested to bid for the block due to its vicinity to his plant and commercial sense.

“Considering single bidder will help in developing such coal blocks and help in augmenting country’s output. This will also lessen the burden on CIL. It is therefore suggested that the single technically qualified bidder in the IPO (Initial Price Offer) round should also be considered as qualified bidder and the auction process for that coal block should not be annulled”, Fimi suggested.

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