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Indian metal and cement companies have bid aggressively for coal blocks in the country's first auction to sell mines - of the 19 blocks currently on offer, 14 have already sold for nearly Rs. 80,000 crores.
In 2012, in a body blow for the Congress-led government of Dr Manmohan Singh, the national auditor (CAG) said that the lack of a transparent bidding process in mining rights had cost the country a swindle worth Rs. 1.86 lakh crores. The bids so far suggest the sales proceeds will zip well past that estimate.
"Certainly the CAG's position has been vindicated. Institutions of the country are doing their best," said Commerce Minister Nirmala Sitharaman.
The auction comes after the Supreme Court last year ordered the cancellation of nearly 200 mining licenses issued by successive governments since 1993. The government had said it expects to raise Rs. 15 lakh crore from the new bidding process. The second round of auctions will include 43 blocks from February 25 to March 5.
Companies who are bidding for the licenses want to cut imports and slash their dependence on inefficient government monopoly, Coal India Ltd. The companies are allowed to bid for enough coal to fuel a 50 per cent expansion of their current metal or cement capacity.
The companies have declined to comment on the auctions until the whole process is complete.
Most of the winning bids so far have been higher than analysts' expectations, based on the benchmark price of state-run Coal India.
Coal India's prices are set according to cost rather than based on supply and demand in the market and its costs are high at Rs. 1,118 per tonne, more than half of which comes from employee and social costs.
For the private companies, mining costs are likely to be between Rs. 400 and 600 per tonne, according to some analysts.
The entire sum raised from the auction will be collected by the government over a period of 30 years. Five per cent of the proceeds will be accrued to the government in this fiscal year.
Coal Auction: Aggressive Bids Suggest People of India Scammed for Years
In 2012, in a body blow for the Congress-led government of Dr Manmohan Singh, the national auditor (CAG) said that the lack of a transparent bidding process in mining rights had cost the country a swindle worth Rs. 1.86 lakh crores. The bids so far suggest the sales proceeds will zip well past that estimate.
"Certainly the CAG's position has been vindicated. Institutions of the country are doing their best," said Commerce Minister Nirmala Sitharaman.
The auction comes after the Supreme Court last year ordered the cancellation of nearly 200 mining licenses issued by successive governments since 1993. The government had said it expects to raise Rs. 15 lakh crore from the new bidding process. The second round of auctions will include 43 blocks from February 25 to March 5.
Companies who are bidding for the licenses want to cut imports and slash their dependence on inefficient government monopoly, Coal India Ltd. The companies are allowed to bid for enough coal to fuel a 50 per cent expansion of their current metal or cement capacity.
The companies have declined to comment on the auctions until the whole process is complete.
Most of the winning bids so far have been higher than analysts' expectations, based on the benchmark price of state-run Coal India.
Coal India's prices are set according to cost rather than based on supply and demand in the market and its costs are high at Rs. 1,118 per tonne, more than half of which comes from employee and social costs.
For the private companies, mining costs are likely to be between Rs. 400 and 600 per tonne, according to some analysts.
The entire sum raised from the auction will be collected by the government over a period of 30 years. Five per cent of the proceeds will be accrued to the government in this fiscal year.
Coal Auction: Aggressive Bids Suggest People of India Scammed for Years
