India: The Coal Ministry has begun the process of allotment of mines to central and state public sector units, starting with the allotment of 36 coal blocks.

The Supreme Court had in September 2014 scrapped all but four of 218 coal blocks allocated by the government over the past two decades, in a tougher-than-expected ruling that sank shares of companies that have invested heavily in projects around the concessions. Most power, steel and cement companies that won blocks have until end-March to return them and the government then plans to auction them off. The previous practice of selective allocation was ruled illegal and arbitrary by the court.

Coal secretary Anil Swarup said that the ministry has started the process of coal allocation. "Today, we are issuing a notification for the allotment of 36 coal blocks. More mines will be added subsequently depending on the requirement. It will depend on the request we receive from state entities or the public sector undertakings in terms of allocation of coal blocks," said Swarup. He added that the ministry would issue guidelines for the coal blocks and those firms that already have coal linkages will have to surrender them. Once the linkages are surrendered then more coal will be made available to state-owned Coal India Limited. Coal India accounts for about 80% of the country's total output. Coal fuels 60% of the country's power production.

"Out of 101 mines, we are looking at 98 mines, as the coal ministry has examined them and it was discovered that there were three blocks in a 'No Go' area. Out of 98 mines, 36 blocks are going for allocation. 42 mines are auctioned, 23 blocks are in schedule II and 23 blocks are in schedule III. The remaining 16 will be auctioned in the future," said Swarup. Around 167 bidders have requested to visit the coal block site.

Coal India plans to engage an external consultant to examine various structures and implementation models to auction the coal linkages. The consultant would examine various structures and implementations models for the auction of coal linkages / LoAs (Letter of Assurances) or other such market-based mechanisms and to recommend the optimal structure that would meet the requirements of all the stakeholders.