KOLKATA (miningweekly.com) - The Indian government would miss the March 31 deadline for allocating 17 coal blocks, and has blamed the delays on the requirement to fix a reserve price.

According to officials in the Coal Ministry involved in the allocation process, an external agency had been mandated in May last year to fix reserve prices for explored and unexplored coal blocks within a three-month timeframe, but the agency was yet to complete the process of determining the reserve price.

There has not been any communication from the external agency on possible reasons for the delay in fixing the reserve price.

But according to Ministry officials, one of the possible causes for the delay was that fixing a reserve price was a vexing process since it would be done on the basis of assessing the financial capabilities of the bidders while at the same time correlating realistically with the value of the coal asset. This was particularly difficult in the case of unexplored coal blocks.

Moreover, there were no existing model for allocating coal blocks based in payment of a reserve price pegged to geological data, which meant that the external agency was having to devise one from scratch while also ensuring that such a model stood up to legal scrutiny.

It was also not clear whether detailed geological data had been made available to the external agency.

In addition, there was doubt as to whether fixing a uniform reserve price was feasible, as the coal blocks were in different geographies with varied geological parameters.

About 78 companies from user industries and mining companies controlled by provincial governments were in the race to bag 17 coal blocks on offer.

The Coal Ministry would be able to invite expressions of interest from the listed 78 entities only after the reserve price was announced, officials said.

The timeline for processing of applications for coal block allocations had earlier been extended to February 8 from January 30. This was the first time that the Indian government was allocating coal blocks through payment of a reserve price under the amended Mines and Mineral Development and Regulation Act, as opposed to allocation through a government screening committee.