Mumbai: The forthcoming auctions of coal blocks are likely to reduce fiscal deficits of the states with coal mines, as about Rs 3,000 crore will flow into their coffers from the process this fiscal, a report has said.
Out of 24 coal blocks being put on auctions, Chhattisgarh will be the biggest beneficiary with minable reserves of 567.77 million tonne, followed by Jharkhand (348.42 mt) and Madhya Pradesh (293.02 mt), the report by SBI Research said.
The other states, which will benefit are Bengal (137 mt), Maharashtra (39.02 mt) and Orissa (33.84 mt). These states together have a minable reserve of 1,419 million tonne. "The coal block auction will result in a windfall gain for state governments. In the current fiscal, about Rs 3,000 crore will flow into state coffers.
"Over the years, the expected revenue from coal block auctions is expected to even wipe-out the states' fiscal deficit significantly," a State Bank of India internal report Ecowrap said.
It said as per the estimates, total payment to the states in next 30 years would be more than Rs 4 lakh crore for 204 blocks that have been cancelled by the Supreme Court.
In addition to this, an equal amount will also flow to the states' treasuries by way of royalty, it added.
"These are initial estimates and the amount may go well beyond this with an increase in coal extraction and auction price," it pointed out.
The Supreme Court on September 24, 2014, cancelled 214 coal block allocations, giving the owners six months time to wind up their work.
Only four blocks, one belongs to NTPC and SAIL each and two allocated to Sasan ultra mega power projects, were not cancelled.
Seeking to move ahead on crucial reforms, the Cabinet on December 24, 2014, approved the ordinance route to raise the overseas investment limit in insurance and facilitate coal mine auctions.
The e-auction for qualified bidders will be held during February 15, and the mine allocation process will be completed by March 15, with the signing of Coal Mine Development and Production Agreement.
