India's coal producing states stand to gain as much as Rs. 55,000 crore from Round Two of e-auctions of 12 blocks that have been offered so far after the Supreme Court had declared the original allotments illegal and ordered fresh tendering.
In the first phase of auctions that concluded in February 2015, 19 blocks were on offer and would raise for the state governments of Chhattisgarh, West Bengal, Jharkhand, Odisha and Maharashtra as much as Rs. 109,000 crore over 30 years, as per officials.
Thus, the coal e-auctions will fetch the producing states Rs. 164,000 crore from the two round so far with two more blocks on offer on Monday and another on Friday -- the last scheduled day for the latest tranche, as per data available with the ministry of coal.
This does not include the royalty which could add up to another Rs. 25,000 crore, officials said. This apart, the coal ministry has also received 107 applications from state-run firms like NTPC, SAIL and Damodar Valley Corp for the allocation of 43 coal blocks, exclusively kept for them.
"The states like Jharkhand, Chattisgarh, Odisha, West Bengal, and Madhya Pradesh to benefit the most out of the e-auction proceeds. Chattisgarh to get Rs. 47,552 crore, Madhya Pradesh Rs. 35,588 crore and Jharkhand Rs. 12,622 crore," coal secretary Anil Swarup had said after the first round.
Prime Minister Narendra Modi was also elated with the bidding.
"This is what we have done in 11 months. Our nation will have a revenue of Rs. 110,000 crore from the auction of only 19 coal blocks of the total 204 blocks," he said last week, referring to the first phase of auctions.
"Imagine how much the nation would earn when we auction all 204 coal blocks?" the Prime Minister asked adding that when all 204 coal mines are put on the auction block, the revenue figures will surpass the figure of Rs. 186,000 crore which the official auditor had potentially estimated.
Under the bidding process approved by the government, the shortlisted participants are required to submit an initial financial bid along with the technical details. On the actual date of the e-auction, the bidder is permitted to anonymously submit as many final price offers as desired.
While the highest bid can be viewed on their screens, the name of the bidder is not divulged.
The terms also require each subsequent bid be made with an increment of Rs. 2, within the notified start and the closing time -- but a grace thereafter period is allowed to increase the bid, even if the closing time has lapsed. The successful bidder thereafter is immediately announced.
The auction has a clause that extractable reserves of the allocated coal mine cannot exceed 150% of the annual requirement of the specified end-use plant over a period of 30 years.
As regards the payment, an upfront amount has been notified for each block. An amount equal to 50% of that is payable immediately, 25% upon the execution of the mining lease and the remaining on the grant of mine opening permission.
The licencee is also required to make monthly payments on the basis of the final price, that will have to be made within 20 days of the expiry of each month. There will also be an escalation in annually, based on a reference mechanism that will be published in the first week of April.