Coal block winners sign pacts with govt.

Hindalco, Balco , Jaypee Group and Anil Ambani's Reliance Group are among the 23 coal block winners who have concluded the Coal Mine Development and Production Agreement with the Government.

The agreements were signed and executed by the Nominated Authority. The successful companies will now have to furnish the performance bank guarantee which is expected to be in excess of Rs. 5,000 crore, before the vesting order is issued by the Ministry for Coal on March 23.

Companies will have to furnish a performance bank guarantee equalling one year’s royalty as per the annual peak rated capacity of the block and the winning bid amount multiplied by the peak rated capacity. For example, in the non-power category, Hindalco, which won the Gare Palma IV/5 block for Rs. 3,502 a tonne will have to furnish nearly Rs. 370 crore as the performance bank guarantee. This would include around Rs. 18 crore as one-year royalty on the annual peak rated capacity and around Rs. 350 crore as the winning bid amount multiplied by the peak rated capacity. Similarly, Essar Power which won the Tokisud North block for Rs. 1,110 a tonne is expected to furnish nearly Rs. 290 crore as the performance bank guarantee. This includes Rs. 31 crore as one- year royalty and Rs. 260 crore as the winning bid amount multiplied by the peak rated capacity.

The Government had estimated total benefit of royalty and e-auction amount over the entire mine life of 31 auctioned blocks to be Rs. 2.09 lakh crore. If awards for the eight blocks under re-examination are withheld, the proceeds from the 23 blocks will be below Rs. 2 lakh crore.

This would mean that the Government is on track for meeting its deadline of successfully concluding the auctions before the Ordinance lapses on April 5. However, companies whose bids are under re-examination (winning bids for eight blocks) due to outliers in the bidding pattern did not ink the agreements. The Government is expected to take a decision on these blocks soon.

HBL