The Union Cabinet led by Prime Minister Narendra Modi has approved auctioning of coal blocks for commercial mining purpose. The auction methodology based on revenue-sharing model has been approved by the Cabinet.
The auction of about 50 coal blocks, including some large mines, will be kick-started very soon. The government is likely to offer major rebates on revenue share to winners of commercial coal block auctions in order to draw investments from local and global miners amid the Coronavirus pandemic.
With easy entry and exit norms for commercial coal auctions, the government expects participation from Indian companies like Hindalco, Jindal Steel & Power, JSW Energy, Adani Group and Vedanta besides global miners like Peabody, BHP Billiton and Rio Tinto.
The companies that start early production from the blocks will be offered 50 percent rebate on revenue share payable to the government. The rebate will start from the day of production till the scheduled commencement date of mining agreed at the time of award of the block.
Similarly a rebate of 50 percent of revenue share is proposed to be given on coal produced in excess of the scheduled target in a financial year. A further rebate of 20 percent on revenue share is proposed on coal used for gasification or liquefaction purposes.