CHENNAI (Reuters) - Real estate, infrastructure and pharmaceutical companies were among the winners of India’s first coal mine auctions open to the private sector without restrictions on end-use, the government said on Monday.
Coal production in India has largely been restricted to state-run Coal India Ltd COAL.NS and another smaller government-controlled company, but Prime Minister Narendra Modi opened up the industry to the private sector this year.
“Almost 65% (of) bidders were from the ‘non-end user’ category like real estate, infrastructure, pharma,” India’s Coal Minister Pralhad Joshi said on Monday, adding that removing end-use restrictions was the right move helped diversify interest in coal mining.
India, the world’s second largest consumer, importer and producer of coal, had offered a range of financial incentives to attract investment, but foreign firms have shunned the auctions and only 19 of the 38 mines received valid bids.
However, the coal ministry said valid bids as a percentage of all mines on offer were higher than what was seen in the 10 auctions preceding the latest, and attributed it to “reforms” including removal of end-use restrictions.
The auctions are conducted in two stages, the first of which is the submission of a technical bid, evaluated by the coal ministry. The bidders who qualify then submit financial bids in which they detail what percentage of revenue would be paid to the government.
Final offers for 19 mines with an annual production capacity of 51 million tonnes ranged from 9.5% to 66.75%, the coal ministry said, adding that the average premium was 29%.
Reporting by Sudarshan Varadhan; Editing by Tom Brown
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