New Delhi: The coal block auction has garnered a sum of more than ₹ 1.52 trillion so far, strengthening the national auditor’s claims that allocation of mines over the years had caused substantial losses to the exchequer.

Coal secretary Anil Swarup tweeted on Sunday that the cumulative amount at the end of Saturday, the third day of the second round of auctions, stood at ₹ 1,52,419 crore.

The first round of auctions started on 14 February with the so-called schedule II list—mines that were operational when the allocations were cancelled.

The current round is for 20 schedule III mines—those that were nearly operational when the allocations were cancelled.

A Comptroller and Auditor General (CAG) report in 2012 found that awarding the mines without an auction may have cost the exchequer ₹ 1.86 trillion.

Prime Minister Narendra Modi has used the coal auction numbers to criticize the former Congress party-led United Progressive Alliance (UPA) government.

The National Democratic Alliance (NDA) government expects the auctions to end the uncertainty that unfolded in August when the Supreme Court cancelled 204 coal mining permits awarded to companies, terming their allotment arbitrary and illegal.

The court had cancelled the licences after the CAG report. Subsequently, the government decided to auction mining permits.

This comes at a time when the Coal Mines (Special Provisions) Bill, 2015—aimed at making the process of issuing coal mine leases more transparent—faces a crucial test in the Rajya Sabha, where the NDA is in a minority.

“Earlier, the states only got benefits of royalty. Now, by the transparent auction process that we are carrying out, the coal bearing states will be getting several lakh of crore of rupees which they can use for creation of long awaited community assets and for welfare of their people," finance minister Arun Jaitley said in his budget speech last month.

This dovetails with Prime Minister Modi’s plans to develop the coal-rich eastern part of the country.

“Entire proceeds of coal auctions would also be given to states; this will enable eastern states to develop at par with rest of the country," minister for power, coal and new and renewable energy Piyush Goyal had earlier said.

India plans to reach a coal production target of 630.25 million tonnes (mt) in the current financial year and a billion tonnes by 2019.

Coal India Ltd, the world’s largest coal miner, is struggling to meet rising demand for the fuel. While India’s power generation capacity has grown 60% over the last five years, coal production has expanded by only around 6%.

The country mined 532 mt in 2009-10, 533 mt in 2010-11 and 540 mt in 2011-12. Production was 557 mt in 2012-13 and 564 mt in 2013-14.

For these targets to be realized, the ongoing auctions will have to play an important role given the coal reserves of the blocks.

The Economic Survey presented last month underlined the importance of coal as a fuel to revive growth in the country.

“A quantum jump in production of domestic coal is critical when the country is gearing up to revive economic growth," the Survey said.

The government aims to auction or allot 110 coal mines. Of these, 65 will be auctioned and 45 allotted to state-owned firms in a process to be completed before the end of the current fiscal year.

These 110 mines have around 350 mt of reserves. Of these, 42 blocks with a production capacity of 90 mt are operational.

Analysts have welcomed the auctions.

“Transparent coal block auctions to boost revenues for the states in addition to the extant royalty receipts," BMR Advisors wrote in a 1 March report.

While states such as Jharkhand and West Bengal stand to gain as much as ₹ 2.5 trillion and ₹ 1.5 trillion, respectively, over a period of 30 years, a pickup in mining activity in the country will help generate ₹ 30,000 crore annually for the National Clean Energy Fund.

Goyal has maintained that this collection of ₹ 30,000 crore per year after four years will help the country achieve its target of 175,000 megawatts of clean energy from sources such as solar and wind.

The government in this year’s annual budget raised the clean energy cess on greenhouse gas-emitting coal from ₹ 100 to ₹ 200 per tonne.

Analysts say the price of cement, steel and sponge iron may rise because of the aggressive bidding by companies but electricity tariffs are unlikely to increase as mines for the sector are being auctioned through so-called reverse bidding, where the lowest bidder wins the auction.

Subscribe to Mint Newsletters * Enter a valid email * Thank you for subscribing to our newsletter.

Share Via