The government may have initiated efforts for coal block auctioning but the domestic industry has expressed opposition saying it will increase the financial burden of companies. The new auctioning method, according to the government, will bring “transparency and objectivity” in the coal block allocation process. But industry experts said it will change the concept of allocation as competitive bidding will replace the allocation process on the basis of an inter-ministerial committee's recommendations. RK Sharma, Secretary General of Federation of Indian Mineral Industries (FIMI), said it will lead to a wastage of valuable resources. He said, “It would discourage risk capital for minerals."
The government has presented a draft that has four models for selection of successful bidders during the multi-step auction process — upfront payment, production-linked payment, upfront payment with priority for development status of the end-use plant and production-linked payment with preference for development status of the end-use plant. However, Sharma said low incentives for private player will discourage them from using the resources and lead to destruction of resources in future. But a senior Coal India official said that there is nothing wrong on the government's part if it charges private players for auctioning.
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