Allotment of Coal Mines to State Government Companies of Coal Bearing Host States for Sale of Coal

Transcription

1 Allotment of Coal Mines to State Government Companies of Coal Bearing Host States for Sale of Coal Queries & Responses to Allotment Document dated April 21, 2016 Part I Nominated Authority Ministry of Coal Government of India New Delhi July 19, 2016

2 A. Queries and Responses to Allotment Document for Allotment of Coal Mines to State Government Companies of Coal Bearing Host States for Sale of Coal 1 Clause 3.2. Eligibility Requirement for Applicants (a) In case the coal block identified for host state is found to be uneconomical, the host state should be given opportunity to get the coal blocks which are identified for other than host states. (a) In respect of Coal blocks identified for other than Host-States, applicants would need to meet the criteria prescribed under Clause of the Allotment Document for Allotment of Coal Mines to Non-Host States and no deviation from the same is presently envisaged. (b)for the blocks identified for other than host states, irrespective of the eligibility, the host state, if interested, should be given first priority. 2 Clause (a) and Clause 7 Performance Security Clause (b) Fixed Amount (a) What is the "BG Amount" & "Fixed Amount" for Baitarani-West coal block? (b) How this "BG Amount" & "Fixed Amount" have been arrived at in respect of Baitarni-West coal block? (b) The Applicant shall be declared as Preferred Applicant based on the Evaluation Criteria as provided in Clause 6 of the Allotment Document for Allotment of Coal Mines to Non-host States. (a) The Fixed Amount shall be communicated shortly. The amount of Performance Security shall be provided on or before the date of signing of Allotment Agreement. (b) The amount of Performance Security shall be calculated as per Clause of the Allotment Document. Fixed amount shall be the sum of the value of Land and Mine Infrastructure, cost of preparation of GR borne by the Prior Allottee, cost of obtaining all statutory licenses, permits, permissions, approvals, clearances or consents relevant to the mining operations, borne by the Prior Allottee. Page 2 of 17

3 3 Clause (b): Fixed Amount Provide break-up of Fixed amount to be borne by the Prior Allottee and clarify the actual amount which is required to be paid by Prior Allottee. No amount is to be borne by the Prior Allottee. However, the Fixed Amount to be paid by the Successful Allottee shall be communicated shortly. 1. Value of Land: As per the existing Government/Ready Reckoner rate at the time of purchasing land. 2. Mine Infrastructure: Excluding the depreciation. 3. Geological Report: If the Geological Exploration had been carried out by any Government Organization, then the payment shall be discounted as per the rules/norms. 4. Authentic expenses (with documental proof like, invoices, certified bills, receipts etc.) paid to the Government/relevant agencies for obtaining clearances, approval, permissions, consents, etc. shall be borne by Prior Allottee. 4 Clause (a) and Clause Performance Security In the event that approved Mine Plan is not available, then the Performance Security shall be calculated on the basis of estimated Peak Rated Capacity. For Penagaddppa coal mine, the Peak Rated Capacity is not available. Hence, it is requested to provide the Performance Security amount. Fixed amount shall be the sum of the value of Land and Mine Infrastructure calculated in accordance with Coal Mine (Special Provisions) Act, 2015, cost of preparation of GR borne by the Prior Allottee, cost of obtaining all statutory licenses, permits, permissions, approvals, clearances or consents relevant to the mining operations, borne by the Prior Allottee. The quantum of compensation for Land and Mine Infrastructure shall be determined in accordance with Clause 16 of The Coal Mines (Special Provisions) Act, 2015 and Rule 14 of the Coal Mines (Special Provision) Rules, The amount of Performance Security shall be provided on or before the date of signing of Allotment Agreement. Page 3 of 17

4 5 Clause Performance Security Performance Security to be waived off. Since the main purpose of allotment of commercial coal blocks to the state PSUs is to feed the coal requirement of local MSME, therefore, The amount of Performance Security as provided in the Allotment Agreement shall be payable by the Allottee. State PSU should not be laden with the additional costs. Also, most of the block identified for commercial mining are those blocks which are left by Coal India due to following:- High stripping ratio Unavailability of infrastructure Dense forest cover which may result in additional cost on the state PSU. 6 Clause Schedule of Allotment Process In addition to "Allotment Document" for the mine, it is necessary to download the "Mine Dossier" for the coal mine. But no last date for downloading of the Mine Dossier has been mentioned in the Schedule Schedule of the Allotment Process: Last Date for Submission of Application Being State PSUs it may take longer than 40 days to get approvals, prepare the application and submit. Request to extend time for submission of applications. The Mine Dossier can be downloaded till the last date of submission of applications. Last date for Submission of Application shall be as per Clause 3.6. of the Allotment Document. Page 4 of 17

5 8 Clause (a) Can the Allottee obtain all approvals/clearances, acquisition of land, as applicable, rehabilitation, financing, development, mining and the operation and maintenance of coal mine and subsequent closure of coal through Mine Developer and Operator (M.D.O.)? (a) Yes. (b) Will the guidelines for the selection of M.D.O. be provided by Nominated Authority/ Government? 9 Clause Periodic Payments by Allottee Monthly payments with respect to the coal produced from the Coal Mine should be required to be made up to the last calendar date of each month, instead of 20 calendar days (b)terms and Conditions for appointment of contractor(s) in relation to coal mining operations may be formulated in line with the terms and conditions specified in the Auction by Competitive Bidding of Coal Mines Rules, 2012 (as amended by notification dated ) framed under Sec. 11A of the MMDR Act. The terms and conditions may be as follows: 1. In case the Coal Mine is developed through contractor(s), the selection of the contractor(s) in relation to coal mining operation shall be through a competitive bidding process and the Allottee company shall inform the State Government concerned, the Central Government and the Nominated Authority about the engagement of such contractor(s) and the terms and conditions of such engagement, as soon as it is finalised. 2. The Allottee shall ensure that the criteria of bidding for engagement of the contractor(s) are not linked to CIL Notified Price. 3. The contractor(s) shall maintain all records as required to be maintained and shall provide such records for the inspection by the Allottee, the State Government concerned, the Central Government and the Nominated Authority. In addition to this, a Model M.D.O. Agreement has already been circulated to State Governments and is available on the website of Ministry of Coal. As per Clause of the Allotment Document. Page 5 of 17

6 10 Clause Periodic Payments by Prior Allottee It should be redrafted as "Such payments are required to be made As per the Allotment Document. within 20 calendar days of expiry of each month with respect to coal produced sold from the Coal Mine in such calendar month. 11 Clause Sale of Coal (a) Is there any standard "Coal Supply Agreement" or guideline from MoC for sale of coal through e-auction? If so, a copy of the same may be furnished for our guidance. (b) Clause (a) How to determine the "MSME share" for sale of coal to MSME buyers in the state? (c) Clause (b) Perhaps the word "purchase" in this clause means "purchase by buyers" or "sale to buyers". (d) Clause (d) In this clause, the word "made available for purchase to MSME buyers" may perhaps be replaced with the words "made available for purchase by MSME buyers". (e) Clause (g) (i) Is "Coal Supply Agreement" in clause different from "Allotment Agreement"? (ii) Is "Coal Supply Agreement" a part of Allotment Agreement"? (iii) Can we get copies of the standard "Coal Supply Agreement" and "Allotment Agreement" for our reference? (a) No. There is no standard "Coal Supply Agreement" as issued by MoC. The coal shall be sold by the Allottee through e-auction process for supply of coal over a period of time pursuant to a contract in a fair and transparent manner and in accordance with Clause of the Allotment Document. (b) As per Clause of the Allotment Document, MSME Share shall mean 25% of the coal production from the Coal Mine in a quarter beginning April/ July/ October/January in a financial year. (c) Coal sold by the Allottee would be available for purchase by buyers and hence the word "purchase" has been used. (d) Noted. This shall be read as "made available for purchase by MSME buyers" (e) (i) Yes. (ii) No. (iii) Standard Allotment Agreement shall be uploaded on the website of MSTC shortly. Page 6 of 17

7 12 Clause Sale of Coal (a) What will be the period of Coal Supply Agreement with buyers? (a) As decided by the Allottee. (b) Who will execute e-auction process for sale of coal? Are there any empanelled agencies like MSTCs nominated by government? (c) Will the Terms and conditions of Coal Supply Agreement be provided by Nominated Authority/Government? (d)can the Allottee frame Coal Supply Agreement on its terms and conditions? (e) Please provide clear guidelines for framing coal supply agreement from the Nominated Authority/ Government. 13 Clause Sale of Coal (a) The Allottee putting Securities and undertaking operational activities must be having power to take commercial decisions like Selling Price. (b) The Allottee should be given liberty to decide the minimum share of MSME and it should not be fixed as 25%. (b) The Allottee shall conduct e-auction process for sale of coal in a fair and transparent manner. The government has not empanelled any agency in this regard. (c )No. (d) Yes. (e) The same may be framed by the Allottee. (a) The Allottee would be free to take commercial decisions regarding selling price of coal subject to the terms of Clause 4.12 of the Allotment Document. (b) The terms of the Allotment Document in this regard are binding on the Allottee. Only the Nominated Authority shall have the right to alter the MSME Share, from time to time as per Clause of the Allotment Document. Page 7 of 17

8 14 Clause Sale of Coal (a) The coal produced from coal mine in a quarter shall be sold by the Allottee through e-auction for a specified quantity of coal. In case, the company itself needs coal then can it participate in the e-auction process? (a) No. The buyer and seller cannot be same. (b) Out of the total coal production in a quarter, 25% is 'MSME Share' and rest 75% is to be sold by the Allottee through e-auction for supply of coal over a period of time pursuant to a Contract. Such e-auction can be carried out in open market or for sale of coal only to the Host State? 15 Clause Registration on MSTC website (a) The applicant is needed to submit a "Declaration" in the format provided in MSTC's website, stating that the applicant is a Government company or corporation. It is observed that the "Declaration format" downloaded from MSTC's website is an old format, which was earlier applicable for Govt. company engaged in "generating thermal power" and now this old format needs modification, which can be applicable for Govt. companies engaged in mining/raising of minerals for the purpose of sale". (b) In the format for "Declaration by Govt. companies", submitted by OMC Ltd., in compliance to clause of the Allotment Document necessary modification, as suggested above, is proposed to be effected by OMC Ltd. The Nominated Authority/MSTC may please confirm that OMC Ltd.'s modified "Declaration" is acceptable. (b) The sale of coal shall be by way of e-auction in accordance with terms and conditions of Clause of the Allotment Document. (a) The modified format has been uploaded on the website of MSTC. (b) The declaration should be in the modified format as uploaded on the MSTC website. Page 8 of 17

9 16 Clause Flexibility in Coal Production Schedule (a) Since, the production of coal shall depend on market, the minimum production requirement of 50% of the quantity in a year as per Mine plan should be changed. (a) As per Clause 8.2 of the Allotment Document. (b) As per the terms and conditions of the Allotment Document, the Allottee has the flexibility of mining upto 80% of the coal as per Mining Plan in any five year block. It is requested that while calculating the amount of Performance Security, 80% of PRC should be considered instead of 100%? 17 Schedule II (c) Format for seeking details of Mineral Extracted and Sold mine-wise (a) Mine-wise mineral extracted & mine-wise mineral sold is not same. Moreover, in SCCL, coal is not despatched to customer directly from the mine. It is done from CHPSCCL which has 46 coal mines and mine-wise coal production is available, but coal is despatched from CHP after mixing of various grades of coal of different mines. Hence, it is not possible to provide the data regarding quantity of coal sold mine-wise. Coal extracted & coal sold is not same all the time. (b) Submission of supporting documents: It is difficult to upload copy of mining lease and relevant extracts from Mine Plans for 46 mines. Exemption is to be given to upload such bulky documents. 18 SCHEDULE II: Other Information Mineral extraction, over burden extraction, material handling can be considered for computing the volume of mineral irrespective of mineral i.e. Mineral shall mean : coal, manganese, iron ore, limestone, bauxite, fluorite, sillimanite, dolomite, kyanite and silica sand. (b) As per Clause 7 of the Allotment Document. (a) Aggregate amount of 'Mineral Extracted and Sold' from all the coal mines for each of the three financial years (FY13, FY14, FY15) may be provided. (b) In case the size of documents is too large and there is difficulty in uploading the same, the Applicant can submit an affidavit certifying that the details of Material Handling Experience provided in the prescribed format as per Schedule II (B) of the Allotment Document are true and accurate and the Applicant undertakes responsibility for the same. A corrigendum has been uploaded on the website of MSTC along with the format of necessary Affidavit to be furnished in this regard. As per Allotment Document. Page 9 of 17

10 19 SCHEDULE II (B) Format for seeking details of Material Handling Experience and SCHEDULE II (C) Format for seeking details of Mineral Extracted and Sold : (i) In Item No. B. regarding "Material Handling Experience", it is mentioned that Mineral shall mean Coal, Manganese, Iron ore, Limestone & Bauxite. As per Allotment Document. (ii) In Item No. C. regarding "Mineral Extracted & Sold", it is mentioned that Mineral shall mean Coal, Manganese, Iron ore, Limestone & Bauxite. Since, OMC is mining & raising Iron ore & Chromite ore, it is requested to include Chromite in Item No. B & C of Schedule-II (Other information). 20 Whether the Allottee can sell coal from this mine to the Power Sector through FSA or otherwise. What are the restrictions for doing so? 21 In Madhya Pradesh, MP Laghu Udhyog Nigam (MPLUN), a state owned corporation supplies coal to small industries through linkages. Can we sign a contract with them? 22 Should one state government provide recommendation to only one Government Company? 23 What will happen in case, four Government Companies of a particular State apply for four different Coal Blocks and there are total 16 applications and all qualify. Page 10 of 17 Sale of Coal shall be as per terms of Clause 4.12 of the Allotment Document. There are no restrictions in respect of sale of coal other than reserved for MSME Share to any sector. No. The coal has to be sold through fair and transparent e-auction process. Bilateral arrangements are not permitted. The mines shall be allotted to any mining PSU or to any State Government PSU holding a recommendation from the State Government. It is the prerogative of the State Government to provide its recommendation to one or more companies as per its discretion. However, a maximum of two coal mines shall be allotted to the Applicant(s) owned by a particular State government under this tranche of Allotment. As per Clause 6 of the Allotment Document. 24 Is Government Guarantee acceptable in place of Bank Guarantee? No. Only Bank Guarantee shall be accepted. 25 MSME Share is fixed at 25%. In case the grade of coal is low and there is no off-take of coal in a quarter, then? The Unsold Quantity, if any, shall be sold as per Clause 4.12 of the Allotment Document.

11 26 What will happen if there is a tie between two or three two or more qualified Applicants? In case of tie, objective criteria must be followed and all the proceedings must be done in a fair way. In case of a tie between the scores of two or more qualified Applicants, other operational and/or financial performance parameters of such Applicants shall be considered e.g. safety, net-worth, turnover etc. as decided by the Nominated Authority. 27 What is the last date for forming a Joint Venture Company of the JV shall have to be formed prior to submission of application. Application purpose of application? 28 Can a Central Public Sector Undertaking, which is into mining activities/ operations, participate in the allotment? 29 Can a power producing company with a recommendation from the State Government allowed to participate in the process of allotment. In case of successful allotment of a mine to such a company, can the company utilise the coal in its power plant? 30 In case there are two applications from the State: one application from the state mining PSU and the other application from a State Government company holding the recommendation letter of the State; whose application will supersede? is to be made in the name of the JV. Central Government undertakings can participate in the allotment process in Joint Venture with the State Government PSUs as per the terms of Clause of the Allotment Document. No. The allotment of coal mines is for the purpose of commercial sale of coal by the Allottee as specified in the Clause 4.12 of the Allotment Document and not for captive use. As per Clause and Clause 6 of the Allotment Document. Page 11 of 17

12 B. Mine Specific Queries and Responses to Coal Mines Identified for Allotment to State Government Companies of Coal Bearing Host States for Sale of Coal 1 Penagaddppa Mine Clause 3.4.3(c), 3.7 & Annexure VI. Upfront Amount The Upfront Amount for Penagaddppa mine is fixed at Rs. 50 crore. Though Geological Reserve is MT (Coal MT, Shaly coal- 60.4MT, Carb shale-31.84mt & non-combustible-6.63mt), actual extractable coal reserve is 7.73MT (if only coal is considered). If coal & shaly coal is considered, then extractable reserve is 24.22MT. The figure is known to SCCL because the GR was prepared by SCCL. For such a small reserve the Upfront Amount is very high. A fixed amount of Rs. 50 crore is to be charged as the upfront payment in case of coal blocks where no Mining Plan has been prepared. 2 Baitarni West Coal Mine Clause Upfront Amount (i) As per clause , the "Upfront Amount" is to be paid as per Annexure- VI. As far as Baitarni West coal block is concerned, the total Upfront Amount has been shown as Rs. 92,44,93, in Annexure-VI of the standard Allotment Document. Upfront payment has been calculated as per the Ministry of Coal Order no: 12012/01/ CA III Dated (ii) This Amount of the Upfront Amount appears to be very high. What are the steps for calculation of the Upfront Amount in respect of Baitarni-West coal block? Page 12 of 17

13 3 Gourangdih A B C Coal Mine Clause 3.7 & Annexure VI Upfront Amount (a) What is the basis of calculation of Upfront Amount of Rs cr in case of Gourangdih A B C Coal Mines. The upfront amount has been estimated on the basis of the total reserve of Mt, but as per the approved Mining Plan, a reserve of Mt under Sector-B is sterilised under surface encumbrances. Thus the Available Reserve is = ( ) = Mt. Hence, the upfront amount should also be proportionately reduced to Rs. (22.27/129.15) * Crore = Rs Crore (a) & (b) Upfront payment has been calculated as per the Ministry of Coal Order no: 12012/01/ CA III Dated (b) Whether the upfront Amount can be revised in view of the availability of lesser (almost half of the Geological Reserve) reserve available for mining due to extraction by ECL and sterilization by surface encumbrances. Page 13 of 17

14 4 Gourangdih A B C Coal Mine The approved Mining Plan envisages achievement of PRC (2.5 MTY) in the 3rd year. The estimates have been made on the basis that mining will commence from the very 1st year at the non-forest areas of Sector - A. But, since then, the non - forest areas have been exhausted by ECL through their Khairabandh OCP and thereafter through illegal mining. So, now mining has to commence from the Forest areas only and for that FC is required to be obtained which, in turn, involve diversion of forest. Moreover, Socio Economic Survey and Environmental Clearance are to be obtained. Thus, it is envisaged that a period of at least 3 (three) years will be required to commence mining at Sector - A. The issue is being examined. Sector-B does not have a Mining Plan At Sector - C: The built - up areas and factories are to be rehabilitated Two major roads to be diverted. HT Power transmission lines are to be diverted Forest land (about 30 Ha) to be diverted Tenanted land to be purchased and dwelling units to be rehabilitated. These activities, together with the statutory clearances, will take not less than 5 (five) years and mining in Sector - C is unlikely to commence before the 6th year from Allotment Date (Zero Date). In view of the above, it appears that the Commencement date as well as the Peak Rated Capacity (PRC) date would deviate from the approved Mining Plan. Can the Allottee proceed as per the proposed revised milestone without revision of the Mining Plan or do we need revision of the mining Plan and its re-approval? Page 14 of 17

15 5 Gourangdih A B C Coal Mine In the Annexure - III submitted by the Prior Allottee, an amount of Rs lakh has been claimed towards 'Preparation of Mining plan/environmental Plan & Feasibility Report etc.', out of which only the Mining Plan has been made available in the Mine Dossier. Whether the Nominated Authority can make the EIA- EMP report available. If not, whether proportionate deductions can be made In the compensation payable to the Prior Allottee. The payment to the Prior Allottee will be based on the documents submitted by the Prior Allottee. 6 Baitarni-West Coal Mine Clause Downloading Information About Coal Mine As per this clause, subsequent to registration in MSTC website, applicants can download (a) the "Mine Dossier" specific to the coal mine & (b) "Allotment Document". After registration in MSTC website, we could download only the following documents from the website of MSTC: (a) GR of Baitarni-West coal mine, (b) Mining Plan & Mine Closure Plan (c) Annexures. But, the Mine Dossier specific to Baitarni West Coal Mine & the Allotment Document could not be downloaded from MSTC website. Mine Dossier of Baitarni West Coal Mine consists of Geological Report, Mining Plan & Mine Closure Plan and Annexures as submitted by the Prior Allottee. Allotment Document is available which is common for all the 8 coal mines on the website of MSTC. The particulars of coal mines and Upfront Amount for each of the mines are provided in Annexure VI of the Allotment Document. MSTC has advised us to refer the matter to the Nominated Authority for the "Mine Dossier" & "Allotment Document". Hence, the Nominated Authority is requested to furnish us the "Mine Dossier" & "Allotment Document" for Baitarni West coal block. Page 15 of 17

16 7 Gourangdih ABC Coal Mine Clause Performance Security read with Clause Reserve Price Whether the amount of Performance Security is Rs crore only for PRC of 2.5 Mty as per the Clauses mentioned. Calculation of Performance Security for Gourangdih ABC mine: PRC = 2.50 Mty; Av. Grade: G-10; Royalty rate in West Bengal: Rs. 5.50/T; So, amount of Performance Security calculated as per Cl is = (2.50 Mt * Rs. 5.50/T Mt * Rs. 5.50/T) = Rs million or Rs Crore only. Reserve Price has been calculated as per the Ministry of Coal Order no: 12012/01/ CA III Dated As per Clause of Allotment Document A Reserve Price equivalent to the amount of royalty on the coal as per prevalent rate shall be payable on per tonne basis to the relevant coal bearing State Government as per actual production of coal by the Allottee including the Allottee in the state of West Bengal where royalty is prescribed in Rs. per tonne. The amount of Reserve Price will be calculated as per the extant / prevailing rate of royalty ad-valorem on price of coal as reflected in the invoice, excluding taxes, levies and other charges. As per Clause of Allotment Document For the purpose of calculation of Performance Security, royalty and Reserve Price shall be determined as follows: a) Except for Coal Mine(s) located the State of West Bengal, the royalty and Reserve Price shall be determined on the basis of CIL Notified Price. b) For Coal Mine(s) located the State of West Bengal, Reserve Price shall be determined on the basis of CIL Notified Price and the royalty shall be determined as per the prevailing rate of royalty. Page 16 of 17

17 C. Other Queries 1 Environment Clearance: For obtaining Environment Clearance, TOR is issued by MoEF for the preparation of EIA/EMP report. Based on these approved EIA/EMP report Public Hearing is conducted. During this, some irrelevant issues are raised by the public. Considering these irrelevant issues, MoEF reschedules further Public Hearing, thereby delaying the entire process. Does not pertain to Ministry of Coal or the present process. 2 Forest Clearance: In case of requirement of Forest Clearances, there is need of NOC from 50% consent by local public. It has been experienced that, 50% people never show their readiness for issuing such NOC. This criteria need to be amended. Instead of NOC from 50% local public, the same should be obtained from Gram Panchayat Members. 3 Milestone Chart: Time schedule should be considered/ calculated from the submission date of application of Allottee, for any of the listed milestones. Does not pertain to Ministry of Coal or the present process. Efficiency Parameters shall be as per Allotment Agreement. Page 17 of 17