Tadicherla -2 Coal Block Allocation to Singareni
Great Advantage for Telangana
After a sustained effort by Telangana government for more than two years, the Government of India allocated the Tadicherla -2-coal block to the Singareni Collieries Company Limited (SCCL). This has taken place while the Congress party under Chief Minister A Revanth Reddy is ruling Telangana and NDA Government led by Prime Minister Narendra Modi is Centre.
Tadicherla -2 block is located in the Bhupalpally district of Telangana and is part of Godavari Valley Coalfield. This is one of the most geologically and strategically important coal formations in the nation. Godavari Valley Coalfield is spread in Mancherial, Peddapally, Bhadradri- Kothagudem districts.
Union Minister for Coal and Mines G Kishan Reddy, a Cabinet Minister from Telangana, made this announcement at New Delhi on July 7th. After examining all the legal issues that are involved and with consent of Narendra Modi, the Centre allocated the coalmine without putting it for auction.
For the first time since 2020, the Union Government has allocated a coal block to a public sector undertaking.
Tadicherla Coal Block contains about 182 million tonnes (MT) of coal of Grade – 8 variety. SCCL can produce about six million tonnes of coal annually between 40 and 50 years. An estimated Rs. 65,000 revenue generation will be there. This allocation saved about Rs. 2,550 crore to SSCL as it has avoided participating in competitive bidding. This will offer about Rs. 16,000 crore revenue to the State Government through royalties and other benefits. In addition to strengthening the SCCL financially, this allocation will create about 1,200 new jobs.
It was estimated that there is geological reserve of 277 million tonnes of coal of which 182 million tonnes can be mined.
The 137-year old SCCL has been operating 39 mines including 21 underground 18 open cast mines employing 41,000 permanent and 31,000 contract employees. In addition, this will give a push to the Telangana energy sector
In India, the government is following two systems for the allocation of coal blocks for production. One was that open auction – under which any eligible company, including public sector, can participate and win the auction. The second one was that public sector entities can get allocation from the Centre without participating in the bidding. Depending on various issues – such as prioritization, financial issues and strategic issues the allocations will take place. The allocation of Tadicherla – 2-coal block to the SCCL without auction means a lot not only to the company but to the State as well.
“India’s Mines and Minerals (Development and Regulation) Act, as amended over the years, provides the statutory basis for both competitive auctions and direct allocations. The Union Ministry of Coal and Mines sits at the apex of this system, holding the authority to designate blocks for state-owned enterprises when specific conditions are met.”
“Competitive auctions typically involve private and commercial bidders submitting premium offers above a reserve price, creating upward price pressure that inflates the long-term cost of production for whoever wins. For state-owned miners operating with public interest mandates, this creates a structural tension: participating in open-market bidding can saddle them with cost burdens that compromise their financial viability for decades.”
“Direct allocation bypasses this entirely. When a block is assigned directly to a public sector entity, the auction premium liability is eliminated, and the miner can proceed with lease negotiations and mine development planning without the overhead of having paid above-market rates for access rights,” according to report published by www.discoveryalert.com.au.
A positive indication for ‘Federal system’
Though the Tadicherla coalmine and the demand for direct allocation is not new to Telangana, surely, the allocation was new and surprising. ‘A positive and persuasive approach by both the Centre and State’ to benefit the nation as a whole and Telangana in particular, has resulted in the allocation.
During the last one-decade rule of Bharat Rashtra Samithi (BRS), things had not moved in desired direction as the State Government failed to maintain cordial relationship with the Centre and preferred confrontational approach.
Eom/1700/Avadhani