Govt’s new guidelines put onus on states

The revised terms and conditions under rule 4 of the “auction by competitive bidding of coal mines Rules 2012” was circulated by the coal ministry on September 3 to steel, power, finance and industrial production ministries for comments before finalisation.

According to the proposed guidelines, the applications should contain detailed justification with reference to requirement of the state, the existing linkages (the plant/industry where the mined coal will be used) and the areas containing coal already allocated.

"The application should also contain details of the steps taken for development, the capability of the company — financial as well as technical and the status of area containing coal directly allocated to them or undertakings of the state concerned," the draft said.

Officials said the revised norms would be applicable to the yet to be allocated 54 coal blocks out of which 12 are marked for state governments. Of the remaining blocks, 16 are earmarked for power companies and 12 for the steel companies.

The 18-point draft guidelines say the coal produced from the blocks would be distributed through long-term contracts or linkages to specified end users approved by the coal ministry. The production of coal would be according to the mining plan and the approved lease agreement.

“It shall be the responsibility of allocatee company to ensure utilisation of coal according to the linkage agreement and the allocatee government company will be responsible for development of coal block as per scheduled milestones ...The mining lease will be in the name of the allocatee company and shall remain with the government company only,” draft said.

The new rules make it clear that in case the coal mine was being developed through mine developer or operator (MDO), its selection would be done through competitive bidding process. “The allocatee company shall inform the Union government of the terms and conditions of engagement of the MDO and ensure that the bidding criteria were not linked to the notified price of Coal India Ltd,” the revised guidelines said.

In case coal is to be used in power generation, the “generating company shall have to participate in the bids for procurement of power by the distributing companies....so as to ensure that the benefit of coal from the said block is passed on to the consumer.”