CCEA approves new methodology for auction of coal, lignite mines
May 20, 2020
New Delhi [India], May 20 : The Cabinet Committee on Economic Affairs (CCEA) has approved the methodology for auction of coal and lignite mines/blocks on revenue sharing basis and increasing the tenure of coking coal linkage.
The CCEA meeting, which took place on Wednesday, was chaired by Prime Minister Narendra Modi.
The new methodology provides that bid parameter will be revenue share. The bidders will be required to bid for a percentage share of revenue payable to the government.
According to an official statement, the floor price shall be 4 per cent of the revenue share. 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 per cent 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 and/or utilisation of coal from the coal mine.
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, said the statement.
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.
The successful bidder shall be required to make monthly payments, which shall be determined as a product of the percentage of revenue share (final bid), the 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 four equal instalments. However, the upfront amount payable shall be as per actual calculation as per above method or as per ceiling whichever is lower.
It also permits commercial exploitation of the CBM present in the mining lease area.
This methodology provides incentives to the successful bidder by way of offering rebates in revenue share in events of the early production of coal from the coal mine and the total quantity of coal consumed or sold or both for gasification or liquefaction on a yearly basis from the coal mine.
As the entire revenue from the auction/allotment of coal mines would accrue to the coal-bearing States, this methodology shall incentivise them with increased revenue which can be utilised for the growth and development of backward areas and their inhabitants including tribals. States in the eastern part of the country will be especially benefited.
The tenure of coking coal linkage in the non-regulated sector linkage auction has been increased up to 30 years, said the statement.
