Odisha requests Centre to postpone coal auction process for three months
BHUBANESWAR: The state government on Tuesday urged the Centre to postpone the coal auction process for three months citing fall in the coal price due to Covid-19 pandemic.
In a letter to Union coal minister Pralhad Joshi, state steel and mines minister Prafulla Mallik said if auctions are allowed at present, it will have an adverse impact on state’s revenue collection from coal sector.
Nine of the total 38 coal blocks listed by the Centre for auction for commercial mining in the first phase are from Odisha. These blocks include Chendipada, Chendipada-II, Machhakata, Mahanadi, Radhikapur (East), Radhikapur (West), Brahmanbil & Kardabahal, Kuraloi (A) North and Phuljhari (East & West). These coal blocks are located in the Talcher and Ib Valley of the state. Around 10,750 million tonnes of coal are reserved in these nine blocks, said official sources. Though the coal ministry had initially planned to auction 41 blocks, it had later revised the list to 38 blocks.
“The Covid-19 pandemic has severely affected the mining business across the country. Also, there has been significant fall in the prices of various grades of coal compared to the previous years. If auctions are allowed at this stage, there are chances that the highest bidding prices for these blocks will be low. Since state government collects royalty based on the coal price, the auction process would hamper royalty collection,” Mallik told TOI.
According to market sources there has been around 20 to 25 percent fall in the prices of various grades of coal compared to the previous years.
As the Centre had planned to complete e-auction of these blocks between October 19 and November 9, the minister said auction process should be resumed once market situation improves in coal sector and also after the pandemic situation recedes.
The decision to allow commercial coal mining was announced by the Centre in June as part of the Atmanirbhar Bharat Abhiyan that aims to make India self-reliant in energy sector and to boost industrial development. The move also aimed to end monopoly of the Coal India Limited (CIL). Commercial coal mining allows anyone including the foreign players to bid for coal blocks, explore coal and sell in open market as the concept of end-use has been scrapped.
Earlier, another coal-bearing state like Jharkhand has moved the Supreme Court against the Centre’s decision to auction coal blocks for commercial mining alleging that the decision was taken by the Centre “unilaterally” without consulting the state.