Date | Feb 09, 2015: Economic Times reported that the government has called a meeting of companies that owned coal mines that were cancelled, amid mounting concerns over a spate of legal challenges principally related to compensation to the previous mine-owners and disputes over the quality of some information in the bid documents, particularly with regard to the quality of coal.
These problems could cast a shadow over the auction of blocks, one of the biggest initiatives of the Mr Narendra Modi government with the intention of boosting coal supply to power stations and factories, has attracted leading business houses.
These include the Vedanta group, which has put in the maximum number of bids; Adani Power and GMR Energy which have bid for all six coal blocks reserved for the power sector; Essar Power that is eyeing four blocks; Jindal Power that has submitted bids for three while Reliance Power in race for two coal blocks.
Miners said that the government's tender documents exaggerate the quality of coal in several operational mines, and offer no compensation for land taken on lease for mining. GVK Power has already approached the Delhi High Court saying its actual expenditure on building mining infrastructure was significantly higher than what the government has evaluated.
The alleged variation in the quality of coal mentioned in the bid documents from the actual output will have an impact on the pricing of coal blocks, royalty and tax rates and efficiency of end use projects as higher grade coal produces more energy than the low grade variety. Bid documents for 23 operational coal mines were uploaded last month and their auction is expected to be completed by last week of March.
A senior official in a bidding company said that "We have raised the issue several times with the coal ministry but it did not respond to our queries. The grades mentioned in some cases are at least 20% higher than the real. This may create a lot of problem after the coal blocks are transferred to companies after auction."
An executive of another company said, the factual error in the grade of coal will adversely affect the auction process as the prospective bidder will aggressively bid based on the information provided in the tender document which is factually in correct. The prospective bidders based on information provided in the tender document will bid for a coal of X grade whereas in reality the coal is of Y grade.
But a top coal ministry official said the ministry did not rely on the information furnished by the companies while putting together the bid documents.
An official in the Central Mine Planning and Design Institute of India Ltd, Coal India's technical arm, said the grades of coal mentioned in the tender documents are based on preliminary data compiled at the time of allocating the mines.
Source – Economic Times
(Source: http://coal.steelguru.com/)