Govt extends commercial coal mining bid deadline by two more weeks from January 13

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The government has extended the deadline to submit the initial bids for the commercial mining of 141 blocks by another two weeks from the January 13 deadline in response to feedback from the industry.

This is the second extension in the deadline which was initially set at December 30.

India is keen to finalise the winners of the commercial coal mines auction by March in an attempt to expedite the process to boost domestic coal output, sources involved with the auction told Moneycontrol.

Last year in November, the Ministry of Coal launched the sixth tranche along with the second attempt of the fifth tranche of commercial coal mines auction for 141 coal mines. This is by far the largest-ever auction for coal mines by the country and the government has eased the eligibility criteria to lure investors.

The ministry is likely to revise the timeline for the bid process. It earlier planned to close the online bidding on the electronic platform by January 13, 2023 and open the bids by January 16.

“There has been an overwhelming response by interested parties who have bought the bid documents so far. Besides parties which are already in the space and have bid before, there are new players who have shown keenness to participate in the bids,” a senior official involved in the process said.

After the initial bids are opened, the ministry will assess the eligibility of the bidders and their bid which may take 2-3 weeks. After that participants would be allowed some time to prepare for financial bids.

“The bidders will be allowed to place financial bids online. Bidding will be open every day in the first half for 3-4 mines each day. We are hopeful that the process will be completed and the winners will be finalised by March,” the official said.

The coal ministry had said earlier that the mines under the ongoing tranche have been selected considering the varied demands within the investor community and some of the coal mines have been resized based on the feedback of the industry to improve their attractiveness.

The 141 mines being auctioned are spread across 11 states, of which 133 are put up for auction in the sixth round of commercial auctions and include 71 new coal mines while 62 coal mines are rolling over from earlier tranches of commercial auctions. Additionally, eight coal mines are being auctioned as a second attempt of the lot that was put up for bidding in the fifth round.

The current round of auctions has liberal criteria based experience from past bids and industry feedback. The government has reduced the upfront amount and bid security amount, given permission to relinquish part of the coal mine in case of partially explored coal mines, introduced National Coal Index and National Lignite Index, removed entry barriers, and allowed flexibility in coal utilization. The government has also optimised the payment structure and is offering incentives for early production, coal gasification and usage of clean coal technologies to attract investment into the sector.

The sale of tender documents started on November 03, 2022. SBI Capital Markets Limited is the sole transaction advisor to the ministry for the commercial coal mine auctions.

While India has been aggressively scaling up its clean energy capacity, coal still accounts for 55 percent of its coal needs. The country has not been able to scale up its domestic output in line with growing demand and has to depend on imports. But the global energy crisis after Russia invaded Ukraine has refuelled interest in coal in countries from Europe to Asia, making it imperative for India to scale up its domestic production.

India’s coal production has increased by 16.39 percent year-on-year to 607.97 million tons (MT) in the nine months ended December 2022. The auction of the 141 coal blocks is a part of the country’s strategy to boost domestic production.