Lok Sabha Question No. 524 (UNSTARRED), answered on 2020-02-05
Subject: Revamping of Coal Auction Process
Ministry: COAL
Asked by: Gowdar Mallikarjunappa Siddeshwara, Manne Srinivas Reddy

## GOVERNMENT OF INDIA MINISTRY OF COAL

## LOK SABHA UNSTARRED QUESTION NO - 524

TO BE ANSWERED ON 05.02.2020

## Revamping of Coal Auction Process

524. SHRI G.M. SIDDESHWAR: SHRI MANNE SRINIVAS REDDY:

Will the Minister of COAL be pleased to state:

- (a) whether it has come to the notice of the Ministry the problems pertaining to coal bidding, not permitting part of output of coal in the market, issues with bank guarantee etc. and if so, the details thereof;
- (b) whether Pratyush Sinha Committee has recently submitted a report for revamping the coal auction process in the country;
- (c) if so, the details of the recommendations made by the Committee; and
- (d) the details of action taken by the Government on each of the recommendations?

## ANSWER

## MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)

(a) to (d): A High Power Expert Committee (HPEC) under the Chairmanship of Shri Pratyush Sinha was constituted on 18.12.2017 to evaluate criteria in the present system and study the challenges and efficacies of the fixed bid system for coal auction and prepare a report which highlights whether the bid criteria needs to be changed for desired improvement in the coal sector.  The  Committee  submitted  its  report  to  Government  on  12.07.2018.  A  copy  of  the Action Taken by the Government on recommendations of HPEC is at Annexure.

*****

## F.No.13011/4/2018-CBA2

## Government of India Ministry of Coal

******

Shastri Bhawan, New Delhi Dated the (t-ft. October, 2018

## OFFICE MEMORANDUM

Subject: Direction of the Central Government to the Nominated Authority under Section 6 (7) of the Coal Mines (Special Provisions) Act, 2015 read with Rule 8 (2) (c) & (d) of the Coal Mines (Specia Provisions) Rules, 2014

The undersigned is directed to say that High Power Expert Committee (HPEC) under the Chairmanship of Shri Pratyush Sinha, former CVC constituted to examine efficacy and challenges in the current bidding sy and suggest changes for conducting auction of coal mines in future submitted its Report on the efficacy and challenges in the current bi system and Recommendations to the Ministry on 12.07.2018.

2. After detailed discussion on the recommendations of HPEC and th Committee of Secretaries (CoS) recommendations thereon, following has been decided with the approval of the Competent Authority:

## 2.1 Gradual shift to commercial mining/sale of coal

- (i) To issue NIT for end use/captive consumption for auction of 1 coal mines (13 for NRS and 6 for Iron & Steel) as already identified.
- (ii)  Continue with the process of allotment of 9 coal mines to PSU (7 for end use Power and 2 for sale of coal), for which NIA has alre
- been issued and offers received.
- (iii) In these allocations (Allotment and Auction), the terms a conditions as contained in this O.M. will also be applicable.
- (iv)  Decision on other points will be taken separately in due course.

## 2.2 Bid Process

In order to avoid cartelization and to encourage competiti during tender process, following is to be considered for short list Technically Qualified Bidders(TQBs) for Final Price Offer(FPO) round:-

- (i)
- If there are 3 TQBs in IPO round, no TQB may be eliminated,
- (ii)  If there are 4 to 6 TQBs in IPO round, only one i.e. t
- last ranked TQB may be eliminated,
- (iii) If there are 7 or more TQBs in IPO round, one third of TQBs in IPO round (who ranked last), subject to a maximum of 3, may be eliminated. While calculating the one third, fractions will be ignored.

## 2.3 Eligibility Criteria

The existing eligibility criteria for sale of coal as well as use/captive consumption may continue.

## 2.4 Number of Minimum Bidders

In case of less than 3 Technically Qualified Bidders, the f attempt of auction shall be annulled and the second attempt auction may be initiated with the approval of Competent Authority the following manner:-

- (a) De novo with a separate set of terms and conditions and floo price as it may be deemed fit (on the lines of provisions Mineral (Auction) Rules, as amended vide 2017 Rules notified by Ministry of Mines).

or

- (b) With the same terms and conditions as in the first annull attempt of auction, and with the highest Initial Price Offe TQBs, if any, in the first annulled attempt of auction as floor price for the second attempt of auction. The biddi shall continue to the 2nd round even in case the number of TQBs is less than3 (on the lines of Mineral (Auction) Rules as amended vide 2017 Rules notified by Ministry of Mines).
- (c) However, in case of only one bidder in the second attempt the auction process will again be annulled and with t approval of Competent Authority such coal mine shall be
- considered for
- Auction de novo with a separate set of terms and conditions and floor price as it may be deemed fit (o the lines of provisions of Mineral (Auction) Rules, a amended vide 2017 Rules notified by Ministry of
- i. Mines)

Or

- Allotment to State / Central PSU or to CIL as per extant provisions of relevant Act and Rules.
- ii.

## 2.5 Flexibility in Production

- (a)  For sale of coal, existing conditions as approved by CCEA
- may continue.
- (b)  For specified end uses - the allocattee to produce coal below 80% of scheduled production in a year in opencast mine (70% in case of underground mine) and not less than 90% of scheduled production in any five year block in
- opencast mine (80% in case of underground mine).

## 2.6 Definition of Captive Use - Utilization of coal by t

## Allocattee.

In case of coal mines earmarked for specified end uses or ow consumption, the allocatee is mandated to utilize a minimum of 75

of its actual production (ROM basis) in specified end use plants allowed to sell upto 25% in open market. No additional premium wil be charged on such sale in the open market.

## 2.7 Exit Clause

The existing provisions of Exit Clause with penalty a forfeiture of Performance Bank Guarantee and no compensation may continue.

## 2.8 Involvement of Respective State Governments in the development of coal mines

The States will continue to get involved at various stage development and monitoring for speedy operationalization of allocat blocks in the form of joint review mechanism as is existing presentl

## 2.9 Calculation of Performance Security

Performance Bank Guarantee may be calculated which is equal to the estimated amount payable against royalty and final bid p corresponding to the following peak rated capacity (PRC) of the mine:

- (a)  For sale of coal:
- For specified end-uses: Auction / Allotment: 90% of PRC in opencast mines (80%

Auction: 70% of the PRC

Allotment: 80% of the PRC

for underground mines).

## 2.10 Relaxation of Efficiency Parameters.

The Efficiency Parameters to be followed is as per attach Annexure. In bona fide cases of delays not attributable to the allocatee and based on the recommendation of the Scrutin Committee, a grace period of maximum 30% for each milestone may be allowed subject to the condition that overall grace period shal exceed 15% of the time granted for the last milestone of development

## 2.11 Single Window

The process of approvals and clearances may be simplified and expedited in consultation with the concerned Ministries / State the extent possible.

## 2.12 Cogeneration as Specified End Use

Necessary action to notify Cogeneration as specified end use wi be taken in the Ministry of Coal (MoC).

## 2.13 Publishing the mine data in public domain for some time.

- (b)

Mine Summary of 71 mines have already been published. On similar lines, Mine Summary of remaining mines may also be put up on website in due course, as and when these become available.

## 2.14 Independent body to decide on the penalty and disputes:-

The Nominated Authority shall continue to perform such statutory/other functions in accordance with the Acts / Rules instructions issued from time to time.

## 2.15 Auction of coal mines for specified end-use "washing of coal

## obtained from a mine"

Considering that washing of coal is a specified end use und the Act / Rules, keeping in view the recommendations of HPEC/CoS, necessary action in this regard will be taken by the MoC to formul a proposal for obtaining approval of the Competent Authority.

## 2.16 Compensation consequent to termination of CMDPA

The existing provisions may continue

- 2.17 Intrinsic value and Upfront amount
- 2.18 Revenue sharing; CIL notified price/domestic index
- 2.19 Definition of Captive Use: (b) Utilization of coal in holdi company
- 2.20 Mixed use as end use

In respect of recommendations at Sl. No. 2.17, 2.18, 2.19 a 2.20, a Group chaired by Additional Secretary (Coal) is being form to submit a definite proposal with all relevant details, which w then be submitted to Competent Authority for decision.

3. Accordingly, in pursuance of Section 6 (7) of the Coal Mines (Spe Provisions) Act, 2015 read with Rule 8 (2) (c) 86 (d) of the Coal Mines (Sp Provisions) Rules, 2014 and with the approval of the competent authori Nominated Authority is hereby directed to note the above decisions and t necessary action accordingly.

Encl: As above

To

The Nominated Authority, Ministry of Coal

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(N.K.Singh) Deputy Secretary to the Govt. of India

Tel. 23384104

## Copy also for information to:-

- 1.
- PS to Minister of Railways and Coal
- 2    PS to MoS, Coal
- 3.
- PSO to Secretary (Coal)/PPS to AS (Coal)
- 4.
- 5.
- 6.
- PPS to JS (RKS)/PPS to JS (BPP)
- Director (Technical), Ministry of Coal
- Director (CLD), Ministry of Coal

## EFFICIENCY PARAMETERS (WITH PROSPECTING)

(With Forest Land)

| Milestone                                                                       | Completion time from Date of Allotment (Months)                                                                                                                                                                                                              | Activity   | Percentage of Performance Security to be appropriated   | Applicability Criteria                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|---------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|---------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Prospecting Licence                                                             | 3                                                                                                                                                                                                                                                            |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Completion of Drilling/ Exploration                                             | 11                                                                                                                                                                                                                                                           | MS-1       |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Preparation of Geological Report (GR)                                           | 15                                                                                                                                                                                                                                                           |            | 5                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Events after preparation of GR                                                  |                                                                                                                                                                                                                                                              |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Mining Lease Application                                                        | 18                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Submission of Mining Plan                                                       | 19                                                                                                                                                                                                                                                           | MS-2       |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Approval of Mining Plan/Project Report                                          | 21                                                                                                                                                                                                                                                           |            | 16                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Application of Previous approval                                                | 22                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Forest Clearance Application                                                    | 22                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Environment Clearance Application                                               | 23                                                                                                                                                                                                                                                           | MS-3A      |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Previous Approval                                                               | 23                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Forestry Clearance(FC)-stage 1                                                  | 33                                                                                                                                                                                                                                                           |            | 7                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Forestry Clearance(FC)-stage 2                                                  | 39                                                                                                                                                                                                                                                           | MS-3B      | 6                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Wild life Clearance                                                             | 39                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|                                                                                 | 39                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Approval under PESA                                                             |                                                                                                                                                                                                                                                              | MS-4       |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Environment Clearance (EC)                                                      | 39                                                                                                                                                                                                                                                           |            | 13                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Approval for Nallah /River Diversion                                            | 45                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Approval for diversion of Power line/Rail/Road                                  | 45                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Permission to draw Water                                                        | 45                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Permission to draw Power                                                        | 45                                                                                                                                                                                                                                                           | MS-5       |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Consent to Establish /Operate under section 11 of                               | 51                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Grant of Mining Lease or Notification CBA Act,1957, as applicable               | 55                                                                                                                                                                                                                                                           |            | 15                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Land Acquisition                                                                | 60                                                                                                                                                                                                                                                           |            | 10                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| possession of land and R&R to reach rated capacity as per                       | 60                                                                                                                                                                                                                                                           | MS-6       |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| approved mining plan Intimation to DGMS for Mine opening                        | 62                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Storage of Petroleum                                                            | 62                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Approval for use of Explosive & Licence for                                     |                                                                                                                                                                                                                                                              |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Permission under Factories Act,1948                                             | 62                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Permission for use of Radio Frequency Communication System                      | 62                                                                                                                                                                                                                                                           | MS-7       |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Labour related Permissions                                                      | 62                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Escrow Account                                                                  | 62                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Application for Opening permission                                              | 63                                                                                                                                                                                                                                                           |            |                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Mine Opening Permission                                                         | 66                                                                                                                                                                                                                                                           |            | 12                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| Schedule of production/ reaching rated capacity as per the approved mining Plan | At least 90% of the Annual Schedule production/ reaching rated capacity as per approved mining plan in case of Opencast mine and atleast 80% of the annual scheduled production/ rated production capacity as per approved mining plan for underground mines | MS-8       | 16                                                      | 1. The appropriation of performance security will be applicable annually on the basis of actual production in the year with respect to the production scheduled as per the approved mining plan. 2. For this purpose, year-wise percentage of performance security will be calculated by equally dividing this percentage (16%) amongst the years from the year of start of production to the year of achievement of peak rated production capacity as per the production schedule of the |
|                                                                                 |                                                                                                                                                                                                                                                              |            |                                                         | approved mining plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Total                                                                           |                                                                                                                                                                                                                                                              |            | 100                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |

## F.No.13011/4/2018-CBA2

## Government of India Ministry of Coal

******

Shastri Bhawan, New Delhi Dated the March, 2019

## ORDER

Subject: Methodology for allowing allocatees of coal mines for specifie end use or own consumption to sell upto 25% of actual production on ROM basis in open market under the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957.

The undersigned is directed to refer to provisions of the Coal M (Special Provisions) Act, 2015, the Rules framed thereunder and methodology dated 26.12.2014 for allocation of coal mines by Government for specified end-uses viz. for Power (regulated sector) and Non-Regulated Sector [Cement, Iron 85 Steel and Captive Power Production clubbed together as NRS].

2. In addition to the provisions contained in the methodology da 26.12.2014 for specified end uses, it has been decided to allow f allocatees of coal mines for specified end use or own consumption to ut a minimum of 75% of actual production (ROM basis) in specified end us plants and to sell upto 25% of actual production (on ROM basis) in o market with payment of additional premium on such sale as mentioned i para 3 below:
3.  Definition of Captive Use - Utilization of coal by the Allocattee.
3. 3.1 In case of coal mines earmarked for specified end uses or consumption, the allocatees are mandated to utilize a minimum of 75% its actual production (ROM basis) in specified end use plants an allowed to sell upto 25% in open market. In case of auctions, the succ bidder shall be required to pay an additional premium of 15% of its fin price on per tonne basis, for the actual quantity of coal sold in open The additional premium will be over and above the final bid price. In ca allotments, the successful allottee shall be required to pay an ad reserve price of 15% of the Reserve Price, for the actual quantity of co in open market. The additional reserve price will be over and abov
4. Reserve Price.
5. 3.2 If due to maintenance or shutdown or such other unavoidable reaso beyond the control of allocattce, during any part of the year, the allo not able to use a minimum of 75% of actual production (ROM basis) i specified end use plant or own consumption, any excess coal out of s 75% of actual production will have to be mandatorily sold by the alloc

to CIL at CIL notified price less 15% of such CIL notified price as per ex conditions.

- 3.3 This would be applicable to auction of coal mines under the 6th an tranches for which NIT has been floated on 25.10.2018 and for allotment mines under the 4th and 5th tranches for which NIA was floated 11.06.2018 as well as future allocations (auction/allotment).
4.  The provisions contained in Para 3 would be applicable to coal mine be allocated under Coal Mines (Special Provisions) Act, 2015, as well a allocation of · coal mines under Mines and Minerals (Development Regulation) Act, 1957.
5.  Para 2.6 of O.M. dated 12.10.2018 stands modified to the extent indicated in para 3 above.

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-kir

(Rishan • . • - ng) Under Secretary to the Government of India Tel. No. 23073936

To,

1. Nominated Authority, MoC
2. JS (CBA-II), MoC
3. JS (CBA-I), MoC
4. DS (CBA-II), MoC
5. DS (NA), MoC
6. DS (CBA-I), MoC

Copy for information to:

1. PS to Minister of Railways and Coal
2. PS to MoS, Coal
3. PSO to Secretary (Coal)
4. PPS to AS (Coal)
5. PPS to JS (RKS)/PPS to JS (BPP)/ PS to JS (AU)
6. Director (Technical), Ministry of Coal
7. Director (CLD), Ministry of Coal