GUIDELINES FOR ALLOCATION OF CAPTIVE BLOCKS &
CONDITIONS OF ALLOTMENT THROUGH THE SCREENING COMMITTEE
1. Applications for allocation of coal blocks for
captive mining for the specified end uses shall be made to the Director (CA-I) in the
Ministry of Coal in five copies. The
application shall be accompanied by the following in addition to any other relevant
documentation that the applicant may submit:
of registration showing that the applicant is a company registered under
Section 3 of the Indian Companies Act. This document should be duly
signed and stamped by the Company Secretary of the Company. (1 copy).
showing the person/s who has/have been authorised to sign on behalf of
the applicant company while dealing with any or all matters connected
with allocation of the sought coal block/s for captive mining with the
Government/its agencies. This document should be duly signed and stamped
by the Company Secretary of the Company. (5 copies)
copy of the Memorandum and Articles of Association of the applicant
Company. (5 Copies)
Annual Accounts/reports of last 3 years. (5 copies)
report in respect of the end use plant. If the report is appraised by a
lender, the appraised report shall also be submitted. (5 copies)
Schedule of implementation (milestones and time-line for each milestone)
for the proposed end use project and the proposed coal mining
development project in the form of bar charts (5 copies). However, the
overall timeframe proposed should not exceed the normative time ceiling
schedule of exploration (milestones and time-line for each milestone) in
respect of unexplored blocks. However, the overall timeframe proposed
should not exceed the normative time ceiling prescribed.
disposal of unuseables containing carbon obtained during mining of coal
or at any stage thereafter including washing. This scheme must include
the disposal/use to which the middlings, tailings, fines, rejects, etc.
from the washery are proposed to be put. (5 copies)
draft for Rs.10,000/- in favour of PAO, Ministry of Coal payable at New
A Soft Copy of details, as filled in the Application Form,
is also to be furnished in the specified Database Form(in MS-Excel
format) in a CD along with the Application.
Applications without the above accompaniments
would be treated as incomplete and shall be rejected.
In respect of fully explored blocks, geological data may be obtained from CMPDIL,
NLC or the State agency concerned, as the case may be, on nominal charges. However, full
cost of exploration and geological reports would be reimbursed to the agency concerned
within six (6) weeks of date of issue of allotment letter.
3. Where only
regionally explored blocks are offered for allocation, the detailed
exploration/prospecting in the said blocks shall be done by the allocattee company under
the supervision of CMPDIL.
Replacement of linkage with coal to be produced from the allocated captive coal
block can be permitted by the Screening Committee subject to safeguarding the interest of
CIL and its subsidiaries.
production during the development phase of the captive mine to the local CIL
Subsidiaries has been allowed at a price to be determined by the Government.
In order to promote scientific and proper mining the larger blocks shall not be sub
blocked into smaller ones. Only natural sub-blocks will be formed.
Allotment of Captive blocks to consortium of group of companies
If requirement of coal by an applicant does not match with the reserves in a
natural block then clubbing of requirements may be resorted to and in case a number of
applicant companies form a consortium for utilisation of a block for their captive use,
the same may be considered for allocation under a legally tenable arrangement.
More than one eligible and deserving companies will be allowed to do captive mining
of coal by forming a joint venture coal mining company. The constituent
applicant companies would hold equity in the joint venture company in proportion to their
assessed requirement of coal and the coal produced would be exclusively consumed in their
respective end use projects. Distribution of coal would be in proportion to their
respective assessed requirements.
One or more companies (to be
called leader companies) from amongst the selected, could be allowed to do mining of coal
in one or more captive blocks and the other companies (to be called associate companies)
would get coal from the captive block in proportion to their assessed requirements.
The local Coal India subsidiary could facilitate this arrangement by taking a nominal
service charge. Leader companies will deliver coal to associate companies at a
transfer prices to be determined by the Central Government.
Mining of Coal by allottee companies
The following dispensations are permitted for
mining of coal from captive blocks:
Any of the companies engaged
in approved end-uses can itself mine coal from a captive coal block; or
A company engaged in any of the approved end-uses can mine coal from a captive
block through a mining company supplying the coal on an exclusive basis from the captive
coal block to the end-user company or to its subsidiary company, provided the end-user
company has firm tie up with mining company for supply of coal, supported by legally binding and enforceable contract / agreement.
(iii) An independent coal/lignite mining
company can also be allocated a captive block on the condition that the entire
coal/lignite so mined would be transferred to an end user company(ies) for their captive
consumption in the specified end uses;
that the said mining company has firm back-to-back tie up with the specified end user
company(ies), supported by legally binding and enforceable supply contract/agreement.
Inter-se priority for allocation of a block among competing applicants for a
captive block may be decided as per the following guidelines:
Status (stage) level of
progress and state of preparedness of the
Networth of the applicant
company (or in the case of a new SP/JV, the networth of their principals);
Production capacity as
proposed in the application;
Maximum recoverable reserve
as proposed in the application;
Date of commissioning of
captive mine as proposed in the application;
Date of completion of
detailed exploration (in respect of unexplored blocks only) as proposed in the
Technical experience (in
terms of existing capacities in coal/lignite mining and specified end use);
Recommendation of the
Administrative Ministry concerned;
Recommendation of the State
Government concerned (i.e. where the captive block is located);
Track record and financial
strength of the company
Preference will be accorded to the power and the
steel sectors. Within the power sector also, priority shall be accorded to projects with
more than 500MW capacity. Similarly, in steel sector, priority shall be given to steel
plants with more than 1 million tonne per annum capacity.
Upon allocation of captive coal block by the Screening Committee the applicant
would submit an affidavit in the prescribed format to the effect that all coal
mined from the captive block shall exclusively be used in the proposed end use project for
which the said block has been allocated and that in case of any slippage in implementation
of the end use project or the captive coal mine development project, as per the schedule
of implementation/bar charts submitted and agreed to by the Ministry of Coal, the said
block shall be deallocated without any liability to the Government /its agencies,
The normative time
limit ceilings have been provided to ensure that
the coal production from the captive blocks shall commence within 36 months (42 months in
case the area is in forest land) of the date of issue of letter of allocation in OC mine
and in 48 months (54 months in case the area fall under forest land) from the date of
said letter in UG mines.
In respect of an unexplored block, the allocattee company shall apply for a
prospecting license within three months of the date of issue of allotment. The exploration
shall be completed and geological report prepared within two years from the date of issue
of prospecting license.
slippage in meeting with the above time limits, unless previously agreed to by the
Screening Committee, for special reasons to recorded in writing, may lead to forfeiture of
bank guarantee, or/and cancellation of allocation, previous approval under Section 5(1) of
the MMDR Act, 1957 or mining lease, as the case may be.
allocattee company shall be required to submit a bank guarantee equal to
one years royalty amount based on mine capacity as assessed by CMPDIL or NLC, as the
case may be, and the weighted average royalty within 3 months of the date of letter of
allotment. Subsequently, upon approval of the mining plan the Bank Guarantee amount will
be modified based on the final peak/rated capacities of the mine.
15. 50% of the bank
guarantee shall be linked to the milestones (time schedule) set for development of captive
block, and the remaining 50% to the guaranteed production. The bank guarantee shall be
liable to be encashed in the following eventuality:
There shall be an
annual review of progress achieved by an allocattee company. In the event of lapses, if any, in the
achievements vis-à-vis the milestones set for that year, a proportionate amount shall be
encashed and deducted from the bank guarantee.
commences, in case of any lag in the production of coal/lignite, a percentage of the bank
guarantee amount will be deducted for the year. This
percentage will be equal to the percentage of deficit in production for the year with
respect to the rated/peak capacity of the mine, e.g., if rated/peak capacity is 100,
production as per the approved mining plan for the relevant year is 50 and actual
production is 35, then (50-35)/100x100= 15% will lead to deduction of 15% of the original
bank guarantee amount for that year. Upon exhaustion of the bank guarantee amount, the
block shall be liable for de-allocation/cancellation of mining lease.
The allocattee shall ensure that the bank guarantee remains valid at all times till
the mine reaches its rated capacity or till the bank guarantee is exhausted. Any lapses on
this count shall lead to de-allocation/ cancellation of mining lease.
16. The Company shall
obtain the geological report (in respect of fully explored blocks), on payment of
requisite charges, from CMPDIL, NLC
or the State Government agency concerned, as the case may be, within
six weeks of the date of issue of allotment letter.
In respect of a fully explored block, the company shall submit a mining plan for
approval by the competent authority under the Central Government within six months from
the date of issue of the letter of allocation.
In respect of an unexplored block, the mining plan shall be submitted for approval
by the competent authority within two years and six months from the date of issue of the
letter of allocation.
Mine opening permission shall be considered only after financial closure for the
proposed end use project is achieved.
In case a captive block is offered/allocated for washing-cum-end-use all the
beneficiated coal from the washery would exclusively be used in the proposed end use
project of the allocatee company as approved by the Central Government and not for
commercial use or otherwise. All middlings, tailings, or rejects from the washery,
as the case may be, and all unusables containing carbon obtained during the mining of coal
or in any process thereafter, if any, shall be used for captive consumption only by the
allocattee in his proposed end use project or as per the scheme for disposal submitted by
the applicant and agreed to by the Screening Committee. In the event that disposal
is allowed by the Government, the modalities of disposal of surplus coal/ middlings/
rejects, if any, would be as per the prevailing policy/ instructions of the
Government at the relevant point in time and could also include handing over
such surplus coal/ middlings/rejects to the local CIL subsidiary or to any person
designated by it at a transfer price to be determined by the Government.