India delays coal mine auction process

Market: Coal
11/08/20

India has delayed the auction of commercial mining coal blocks by more than a month following requests from potential investors, as the rapid increase in Covid-19 cases continued to dampen investor sentiment in the country.

The due date for the submission of bids has been revised to 29 September from 18 August, according to a notice dated 8 August that posted on the e-commerce portal of Indian trading firm MSTC, the nominated authority conducting the online coal block auction. The last date for issuance of tender documents has been extended to 25 September from 14 August. MSTC did not give a reason for the revised timelines.

MSTC will conduct the auction from 19 October and will make a final offer to qualified bidders by 9 November. The last date for the submission of requests to visit the mines to be auctioned has been delayed to 18 September, from 15 July.

India's ambitious plans to open up commercial coal mining to the private sector has faced a number of challenges. The country's coal ministry originally finalised as many as 41 coal blocks, comprising 37 thermal blocks and four coking coal mines with a combined peak-rated capacity of 225mn t/yr for the first round of bidding.

But growing opposition from some provincial governments forced it to remove a number of coal blocks that are located in ecologically sensitive areas. The ministry recently agreed to replace five coal blocks in the central state of Chhattisgarh with three other blocks in the state. It has also withdrawn a coal block in the western state of Maharashtra as the mine is near a tiger reserve.

The federal government was also sued by the eastern state of Jharkhand, which houses large coal reserves. The state is seeking a delay to the auction, anticipating a lukewarm response during the coronavirus outbreak. It has also sought a fair assessment of the social and environmental impact of commercial coal mining on the tribal population and vast tracts of forest land. Prospective investors have also raised multiple queries over the terms and timelines of the auction, with some requesting a postponement of at least two months.

Coal workers' unions have also opposed the auction. The unions held a three-day strike in early July leading to a 56pc loss in coal output at state controlled mining firm Coal India (CIL). The unions continue to oppose the auction despite the ministry clarifying that the opening of the sector will not lead to the privatisation of CIL.

By Ajay Modi

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