by ajoy k. das
[KOLKATA, India] — India’s Ministry of Coal has ruled out possibilities of deferring the auction of the second tranche of 67 coal blocks to private miners due to the second wave of the pandemic that is raging across the country.
India has emerged as the worst affected country, reporting more than 300,000 COVID-19 infections daily and more than 3,000 deaths daily since early this month.
Officials said following a pre-bid meeting recently with prospective investors, the ministry of coal is continuously monitoring the pandemic situation in the country and while “appropriate decisions” would be taken, as things stand now, the timeline of putting up the 67 coal blocks for auction would not be changed.
On the contrary, based on the pre-bid meeting with prospective investors, the Indian government is working on framing a project financing policy to support successful bidders in accessing long-term funding for development of the assets secured at the auctions.
The need to provide long-term funding to support private coal miners is against the backdrop of global financing agencies shying away from offering long-term funds to coal projects. An Indian domestic financial institution has not been able to make a final decision on extending debt to a coal project in Australia in face of local opposition.
An official with the Ministry of Coal said talks are ongoing with its counterparts in the Ministry of Finance to frame project financing policy, including exploring options of opening the dedicated long-term debt financing window exclusively to fund investors undertaking projects to develop coal blocks secured through the government’s auction program.
In March, the government officially launched the second round of the auction, putting 67 coal assets up for bid. The coal blocks are a mix of small and large reserves of coking and non-coking coal spread across six states.
Significantly, for these 67 blocks, the Ministry of Coal would for the first time adopt a “rolling auction mechanism” based on suggestions put forth by various industry stakeholders.
Under the experimental new rolling auction scheme, an investor would have the option to select the mine to be included in the auctions. The unsold blocks would be put in an open pool and made available for sale in a subsequent round of bidding with the government expecting it to be more investor friendly as it allows the investor to select blocks to be auctioned that suit their requirements, a government official said.