CIL has to pay reserve price for 116 coal blocks: Govt

New Delhi, Dec 4: State-owned Coal India (CIL), like any other bidder will have to pay the reserve price for 116 blocks alloted to it in May 2012, the government had said.

The government is in the process of fixing a reserve price for auction of coal blocks through competitive bidding, which will be notified soon, Minister of State for Coal, Pratik Prakash Babu Patil said in a written reply tabled on Monday in Rajya Sabha.

"While assigning 116 coal blocks it was intimated to CIL that the reserve price payable in respect of the above blocks is yet to be worked out and on finalisation of the reserve price, the same would be required to be paid by CIL," Patil said.

So far, Coal India Ltd was not paying any reserve price to the government. CIL has also submitted a tentative perspective plan for development of these blocks, he added.

Battling problems like less production, CIL in September 2011 had requested for allocation of these 116 blocks, which were assigned to it by the Ministry of Coal in May 2012 for meeting its long-term production targets.

The government, meanwhile, notified 'The Auction by Competitive Bidding of Coal Mines Rules 2011' on February 2, 2012 after Parliament passed an amendment in Mines and Minerals Development and Regulation Act (MMRDA) to introduce competitive bidding as a selection process for allocation of blocks.

"Under these Rules a floor price for such area shall be notified for inviting the bids and a reserve price is fixed, which is payable by the government companies and for the blocks alloted to the companies that are awarded power projects on the basis of tariff based bids," Patil said.

The government had asked financial service firm CRISIL to provide a report on the methodology to determine the reserve price for bidding of the blocks.

CRISIL, which submitted its draft report in October, has reportedly suggested preparation of a robust feasibility report of the blocks and usage of Discounted Cash Flow (DCF) method for valuation of the blocks.

CoalMin decides to deallocate 2 more coal blocks

The govt has decided to deallocate two coal blocks -- one each of Chhattisgarh Mineral Development Corporation and Odisha Mining Corporation-- for delaying production from the mines.

"The recommendation of the IMG (Inter-Ministerial Group) has since been considered and accepted by the government. Accordingly, Shankarpur (Bhatgaon-II) & Ext coal block alloted to Chhattisgarh Mineral Development Corporation is deallocated," the Coal Ministry said in a letter to the PSU on Sunday.

The letter also said that the Bank Guarantee (BG) to the extent of Rs 1.59 crore (i.e. 50 percent of the BG related to development of the coal block) be forfeited.

The Coal Ministry in another letter to Odisha Mining Corporation said, "Utkal-D coal block allocated to Odisha Mining Corporation is deallocated. The company shall not be eligible for allocation of coal block in lieu of the deallocated coal block."

The IMG had already concluded the scrutiny of 31 coal blocks allotted to 51 private firms and the government had accepted its recommendations for de-allocation of 13 mines and deduction of bank guarantees of 14 allottees.

A total of 58 mines were issued show-cause notices for their failure to develop blocks within stipulated timeline.

The government had formed the IMG in July to review progress of coal blocks allocated to firms for captive use.