Cabinet approves new methodology for coal mines

New Delhi: The Cabinet Committee on Economic Affairs on Tuesday approved the methodology for allowing the allocatee of coal mines for specified end use or own consumption to sell 25 per cent of actual production on ROM basis in open market.

The outputs will be sold with payment of additional premium on such sale under the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957.

Under this new purpose, the allocatees are mandated to utilize a minimum of 75 per cent of its actual production (ROM basis) in specified end-use plants and are allowed to sell up to 25 per cent in open market.

In case of auctions, the successful bidder shall be required to pay an additional premium of 15 per cent of its final bid price on per tonne basis, for the actual quantity of coal sold in open market. The additional premium will be over and above the final bid price.

On the other hand, the successful allottees shall be required to pay an additional reserve price of 15 per cent of the reserve price, for the actual quantity of coal sold in the open market. The additional reserve price will be over and above the reserve price.

This methodology attempts to address the issue of lack of response from the bidders during the earlier tranches of auction and allotment under the Coal Mines (Special Provisions) Act, 2015.

The methodology will give certain flexibility to allocatees in cases of change in the economic situation, business cycle, end use plant requirement etc. It is expected to make the on-going and future tranches of auction and allotment attractive and commercially viable and may increase the competition in the auction process. It is also expected to increase competitiveness and tine higher investment should create direct and indirect employment in coal bearing areas especially in the mining sector and will have an impact on the economic development of these regions.

Presently, the allocatees of coal mines for specified end use or own consumption are not permitted to sell coal in the open market.