December 05, 2012 / 08:41 IST
State-owned Coal India (CIL), like any other bidder will have to pay the reserve price for 116 blocks alloted to it in May 2012, the government has said. The government is in the process of fixing a reserve price for auction of coal blocks through competitive bidding, which will be notified soon, Minister of State for Coal, Pratik Prakash Babu Patil said in a written reply tabled in Rajya Sabha.
"While assigning 116 coal blocks it was intimated to CIL that the reserve price payable in respect of the above blocks is yet to be worked out and on finalisation of the reserve price, the same would be required to be paid by CIL," Patil said. So far, Coal India Ltd was not paying any reserve price to the government. CIL has also submitted a tentative perspective plan for development of these blocks, he added.Also Read:Coal India Board to discuss price pooling in Dec meetCIL lines up Rs 50,000 cr investment plans for next 5 yearsBattling problems like less production, CIL in September 2011 had requested for allocation of these 116 blocks, which were assigned to it by the Ministry of Coal in May 2012 for meeting its long-term production targets. The government, meanwhile, notified 'The Auction by Competitive Bidding of Coal Mines Rules 2011' on February 2, 2012 after Parliament passed an amendment in Mines and Minerals Development and Regulation Act (MMRDA) to introduce competitive bidding as a selection process for allocation of blocks."Under these Rules a floor price for such area shall be notified for inviting the bids and a reserve price is fixed, which is payable by the government companies and for the blocks alloted to the companies that are awarded power projects on the basis of tariff based bids," Patil said. The government had asked financial service firm CRISIL to provide a report on the methodology to determine the reserve price for bidding of the blocks.CRISIL, which submitted its draft report in October, has reportedly suggested preparation of a robust feasibility report of the blocks and usage of Discounted Cash Flow (DCF) method for valuation of the blocks. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
