Lok Sabha Question No. 2003 (UNSTARRED), answered on 2017-07-27
Subject: Auction of Coal Blocks
Ministry: COAL
Asked by: SANJAY SHAMRAO DHOTRE, PRABHAS KUMAR SINGH, SATYA PAL SINGH

## Government of India Ministry of Coal Lok Sabha Unstarred Question No. 2003 To be answered on 27.07.2017

## Auction of Coal Blocks

## 2003.  SHRI SANJAY DHOTRE: DR. PRABHAS KUMAR SINGH: DR. SATYAPAL SINGH:

Will the Minister of COAL be pleased to state:

- (a) the  number  of  coal  blocks  auctioned/proposed  to  be  auctioned  across  the country during each of the last three years and the current year, State-wise;
- (b) whether the coal mines whose auctions were cancelled earlier have been re-auctioned and if so, the details thereof;
- (c) whether  the  revenue  generated  from  auction  of  the  said  coal  blocks  have been transferred to the respective States by the Union Government so far and if so, the details thereof, State-wise and if not, the reasons therefor;
- (d) whether the cases of cartelisation/other irregularities have come to the notice of the Government in the auction of the said coal blocks in the country and if so, the details thereof, company-wise along with the action taken/being taken by the Government in such cases so far; and
- (e) the other steps taken/being taken by the Government to ensure transparency in auction of the coal blocks?

## ANSWER

## MINISTER OF STATE (I/C) FOR COAL, POWER, NEW & RENEWABLE ENERGY AND MINES

## (SHRI PIYUSH GOYAL)

- (a) & (b): Allocation of 204 cancelled coal mines are made under the provisions of the Coal Mines (Special Provisions) Act, 2015 and the Rules made thereunder.

So far, the Government have allocated 31 coal mines by way of auction under the provisions of the Coal Mines (Special Provisions) Act, 2015 and the Rules made thereunder. The State-wise and year-wise details are as under:

|                | Auction Year   | Auction Year   | Auction Year   |
|----------------|----------------|----------------|----------------|
| State          | 2014-15        | 2015-16        | 2016-17        |
| Chhattisgarh   | 5              | 0              | 0              |
| Jharkhand      | 10             | 0              | 0              |
| Madhya Pradesh | 5              | 0              | 0              |
| Maharashtra    | 3              | 2              | 0              |
| Odisha         | 3              | 0              | 0              |
| West Bengal    | 3              | 0              | 0              |
| Total          | 29             | 2              | 0              |

Allocation of coal mines / blocks under the provisions of the said Act is an ongoing process and 23 coal mines have been proposed to be allocated by way of auction under the Action Plan for 2017-18. Since the final closing bid price in case of 4 coal mines, namely, Gare Palma IV/2& IV/3, Gare Palma IV/1 and Tara, was not found to be reflecting fair value, the Government did not to approve these bids. Out of these 4 coal mines, Gare Palma IV/1 coal mine has been proposed to be allocated by way of auction under the Action Plan 2017-18.

(c): A total revenue of Rs. 2,142.54 crore (excluding Royalty, taxes, cess etc.) has been  generated  upto  June,  2017  from  the  auction  of  coal  mines.  Out  of  this, approximately Rs. 2,139.94 crore has already been transferred  to/directly deposited with  the  respective  States  and  an  amount  of  Rs.  2.60  crore  is  with  the  Central Government. State wise details are as under:

| Revenue generated and transferred to State Government from auctioned coal mines up to June, 2017   | Revenue generated and transferred to State Government from auctioned coal mines up to June, 2017   | Revenue generated and transferred to State Government from auctioned coal mines up to June, 2017   | Revenue generated and transferred to State Government from auctioned coal mines up to June, 2017   | Revenue generated and transferred to State Government from auctioned coal mines up to June, 2017   |
|----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------|
| State                                                                                              | Revenue Generated (In Rupees)                                                                      | Revenue Transferred to /directly deposited with State Government (In Rupees)                       | Revenue with Government Rupees)                                                                    | Central (In                                                                                        |
| Chhattisgarh                                                                                       | 9211113970                                                                                         | 9211113970                                                                                         | 0                                                                                                  |                                                                                                    |
| Jharkhand                                                                                          | 2263857214                                                                                         | 2263857214                                                                                         | 0                                                                                                  |                                                                                                    |
| Madhya Pradesh                                                                                     | 5404921537                                                                                         | 5378918530                                                                                         | 26003007                                                                                           |                                                                                                    |
| Maharashtra                                                                                        | 809470935                                                                                          | 809470935                                                                                          | 0                                                                                                  |                                                                                                    |
| Odisha                                                                                             | 466311661                                                                                          | 466311661                                                                                          | 0                                                                                                  |                                                                                                    |
| Telengana                                                                                          | 0                                                                                                  | 0                                                                                                  | 0                                                                                                  |                                                                                                    |
| West Bengal                                                                                        | 3269760398                                                                                         | 3269760398                                                                                         | 0                                                                                                  |                                                                                                    |
| Total                                                                                              | 2142,54,35,715                                                                                     | 2139,94,32,708                                                                                     | 2,60,03,007                                                                                        |                                                                                                    |

Payments  on  account  of  monthly  payment  calculated  on  the  quantity  of  coal produced  as  well  as  second  and  third  instalments  of  Upfront  Amount  are  now deposited by the successful bidders/ allottees directly with the host States where the coal mine is located.

(d):  A  few  complaints  were  received  regarding  cartelization  in  bidding.  Since,  the final closing bid price in case of 4 coal mines, namely, Gare Palma IV/2& IV/3, Gare Palma IV/1 and Tara, was not found to be reflecting fair value, the Government did not  approve  these  bids.  In  order  to  prevent  the  possibility  of  cartelization/price manipulation,  auction  design  has  been  slightly  modified  whereby  multiple  bids submitted by a Company or a Group in initial price offer (IPO) for a coal mine would be counted as one for the purpose of determining the eligibility  to participate in final price offer (FPO).

(e): To  keep  the  process  transparent,  the  first  ever  auction  of  coal  mines  were conducted through e-auction mode on an electronic platform. No physical bids were accepted  or  considered.  Applications  were  required  to  be  submitted  online  for allotment  of  coal  mines  to  Government  companies  also.  Further,  to  ensure  the foolproof  security  of  the  E-platform  of  M/s  MSTC,  Security  Audit  had  also  been conducted prior to auction of coal mines. It was one of the most transparent auctions where bids  were  placed  on  an  electronic  platform  accessible  to  everyone  with  an internet connection. In fact, everyone had the option of tracking the progress of the auction on their mobile phones. The Ministry had to augment the server capacity as many people were viewing the auctions live simultaneously. The number and names of the companies which had applied were publicly disclosed in open forums where hundreds of bidders were present along with members of the media too. The entire proceedings  were  videotaped.  There  were  also  press  releases  and  names  were disclosed  on  the  auction  website.  Technical  and  financial  parameters  for  the qualification of bidders were clearly laid down in the tender document, which is even today  available  in  the  public  domain  on  the  website.  Grounds  for  disqualification were also clearly mentioned in the tender document. Specific reasons were given to such bidders. The initial bid price (applicable floor price) and subsequent bids were also publically visible. The parameters for determining the floor price and subsequent bids were part of the methodology and on public display on the website. Thus, each and every data point was actually available in the public domain.

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