The government has relaxed the performance guarantee norms to attract bids for coal mine auctions and has extended the bid due date for the commercial auction to January 30.
The coal ministry has decided that for all future auctions of coal blocks the first revision in the performance bank guarantee would be done only upon the grant of mine opening permission for the respective coal mines and not annually.
“This investor-friendly initiative is expected to reduce the financial burden on the bidders during the process of operationalisation of the coal mines and is expected to enhance participation in the commercial coal mines’ auctions,” the coal ministry said in a statement.
According to the tender document, the performance bank guarantee (PBG) to be submitted for each successfully auctioned coal mine is to be revised annually based on the National Coal Index (NCI) for the month of April in the beginning of the year.
Since NCI has become double since the launch of the first commercial coal mine auctions in 2020, several representations were received from the industry for relaxation in PBG revision provisions. It was requested that the unprecedented increase in NCI has led to a significant financial burden on successful bidders, whose mines are in the pre-operationalisation stage, impacting fund availability for mine operationalisation activities.
The move is expected to reduce the financial burden on the bidders during the process of operationalisation of coalmines and is likely to increase participation from the bidders in the sale of commercial coal blocks.
The government has extended the deadline to submit the initial bids for the commercial mining of 141 blocks by another two weeks to January 30 from the earlier January 13 deadline.
This is the second extension in the deadline which was initially set on December 30. In November, the coal ministry had launched the process for auction of 133 coal mines under the sixth round of commercial auctions, of which 71 were new coal mines and 62 were rolled over from earlier tranches of commercial auctions.
Eight coal mines under the second attempt of fifth round of commercial auctions were launched.