New Delhi: The ministry of coal has decided to relax the provisions relating to submission of performance bank guarantee (PBG) by allowing the successful bidders to do it up on the grant of mine opening permission, instead of at the time of allotment of mines.
The coal ministry has made the crucial amendment in the term and condition of the tender document for the 6th round and 2nd attempt of 5th round of commercial coal mines’ auction for 141 coal blocks that went live on November 3rd last year. Accordingly, the ministry has extended the auction bid due date to January 30, 2023 from its earlier bid due date of January 13, 2023 to effectuate this amendment in the ongoing round of auctioning.
A senior officer of the coal ministry told Khabar Infra that the norms relating to performance bank guarantee had to be amended in view of demand from the industry and to promote ease of doing business (EoDB). “Earlier, firms, which got the mining right for coal, had to deposit the PBG at the time of mine’s allocation,” he said, adding that mining firms would not longer bother for bank guarantee for pre-operationalization stage that often impacted their fund availability for mine operationalization activities.
“The submission of performance bank guarantee, which keeps on changing as per the national coal index (NCI), at the time of allocation used to be a financial burden for the coal mining firms. Coal production usually starts after two-three years of the allocation of mines, as coal companies required at least that much time in getting various clearances from the state governments and other agencies to actually start the mining,” explained the officer.
The step is equally beneficial for the coal ministry as it would keep revision the PBG at the start of every fiscal depending up on the prevalent NCI rates. “NCI has doubled since the launch of first commercial coal mine auctions in 2020,” said the officer.
This investor friendly initiative is expected to reduce the financial burden on the bidders during the process of operationalisation of the coal mines and is expected to enhance participation from the bidders in the commercial coal mines’ auctions, said a ministry official.