This Article is From Nov 19, 2014

Government Announces Draft Rules for E-Auction of Coal Blocks

Government Announces Draft Rules for E-Auction of Coal Blocks

The coal secretary said that auction rules would be notified next week

New Delhi: The government has announced draft rules for the e-auction of coal blocks whose allocation was cancelled by the Supreme Court. 72 blocks will be auctioned only to specified end-users, Coal Secretary Anil Swarup said today.

Mr Swarup made it clear that the auction would not be a "revenue maximising exercise" and that the government wants to ensure that power tariffs do not rise after the auction.

He also said that to ensure that coal blocks are not monopolised, there will be a cap on the number of blocks one entity can bid for. This would limit the amount of coal a company can get in the auction, which will be a two-step electronic process.

Mr Swarup said auction rules would be notified next week, after various stakeholders had provided inputs on the draft rules issues today. The official said the government hoped to issue letters awarding contracts by March 16, next year. The newly-allocated blocks will start operating from March 31.

The Supreme Court had in September cancelled the allotment of 214 coal mines to various companies since 1993, saying the process used to assign coal licences by successive governments was "arbitrary and illegal." In October, it issued an executive order or Ordinance to facilitate fresh allotment through auction.

The Ordinance said all firms whose coal blocks were cancelled by the Supreme Court, barring those convicted for offences related to mines allotment, can bid in the e-auction after paying an additional levy. Mr Swarup said today that the firms taking part in the auction must pay the extra levy by December 15.

Mines will be put up for e-auction for the first time. So far the government has only allowed the e-auction of coal and not mines.

Finance Minister Arun Jaitley had said last month that the entire process of re-allocation would be completed within three to four months.

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