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					</table>The <a href="https://mines.gov.in/webportal/home" target="_blank" rel="noopener">Ministry of Mines</a> has issued the second tranche of the auction for the grant of concessions for 18 critical and strategic mineral blocks across eight states, with 17 designated for the grant of composite license and one for the mining lease.
The Union Minister of Parliamentary Affairs, <a href="https://coal.nic.in/" target="_blank" rel="noopener">Coal</a> and <a href="https://mines.gov.in/webportal/home" target="_blank" rel="noopener">Mines</a>, Pralhad Joshi, during the announcement, highlighted the diverse array of minerals up for auction in the second tranche, including Tungsten, Vanadium, Graphite, Rare Earth elements, Glauconite, Phosphorite, Nickel, Platinum group of minerals, Cobalt, and Potash.
Notably, the launch of Potash mining in India is a significant milestone achieved through this auction.
The mineral blocks are spread across states such as Andhra Pradesh, Arunachal Pradesh, Chhattisgarh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu.
The critical minerals from the list essential for clean energy include Tungsten, Vanadium, Graphite, Copper, Gold, Nickel, Cobalt, Manganese, Iron, Platinum-group elements (PGE), and Chromium.
<img loading="lazy" decoding="async" class="aligncenter wp-image-63941 size-full" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1.png" alt="" width="802" height="522" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1.png 802w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1-300x195.png 300w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1-768x500.png 768w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1-650x423.png 650w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1-624x406.png 624w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2024/03/Picture1-600x391.png 600w" sizes="(max-width: 802px) 100vw, 802px" />
The auction process has begun, with the sale of tender documents starting on the same day as the launch. The last date for purchasing the tender document is April 18, 2024. Bidders have to submit ₹300,000 (~$3,620) as cost of the document fee.
The last date for the submission of bids is April 23, 2024.
Interested parties can access detailed information about the mine locations, auction terms, and timelines on the MSTC auction platform.
The auction will be conducted online through a transparent two-stage ascending forward auction process. Eligible bidders will be selected based on the highest percentage of the value of mineral dispatch quoted by them.
During the launch event, the Ministry also distributed letters of financial grants to start-ups in the mining and mineral sector.
Additionally, the annual capacity-building plan for the Geological Survey of India (<a href="https://www.gsi.gov.in/webcenter/portal/OCBIS" target="_blank" rel="noopener">GSI</a>) was released, and the government emphasized its commitment to fostering growth and innovation in the sector.
First Tranche
In his address, the Minister expressed satisfaction with the response from the mining industry during the first tranche, where twenty blocks were <a href="https://www.mercomindia.com/ministry-of-mines-issues-critical-minerals-blocks" target="_blank" rel="noopener">auctioned</a>.
The strong interest demonstrated in the auction process was reaffirmed by the Ministry of Mines, which received over 50 bids for the first tranche of the auction of critical and strategic minerals.
The first tranche was earlier launched on November 29, 2023, which saw the auction of 20 critical and strategic mineral blocks, including minerals like glauconite, nickel, platinum group elements (PGE), potash, graphite, molybdenum, phosphorite, lithium, and rare earth elements (REE).
These blocks were distributed across states such as Bihar, Chhattisgarh, Gujarat, Jharkhand, Odisha, Tamil Nadu, Uttar Pradesh, and the Union Territory of Jammu and Kashmir.
The technical bid evaluation for the first tranche took place on February 27, 2024, with more than 180 tender documents purchased by interested bidders. The bidders represented a diverse range of sectors, including mining companies, EV manufacturers, cement producers, and energy sector entities.
The bidding companies included Vedanta, Coal India, NLC  India, Shree Cement, Orient Cements, Ola Electric, Dalmia Group, Rungta Group, Jindal Power, etc.
The Ministry of Mines recently <a href="https://www.mercomindia.com/cap-payments-critical-mineral-auctions" target="_blank" rel="noopener">proposed</a> changes to the Mineral (Auction) Rules, 2015, to cap the amount of performance security and upfront payments payable after winning the rights to extract minerals. The move addresses concerns regarding financial barriers that might impede bidder participation in auctions of critical minerals.
In September last year, the government <a href="https://www.mercomindia.com/government-cost-for-critical-mineral-exploration" target="_blank" rel="noopener">announced</a> a 25% incentive on the approved project cost for exploration agencies to enhance the exploration of critical minerals.

India Launches Second Tranche of Auction for Critical and Strategic Mineral Blocks

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					</table>The <a href="https://powermin.gov.in/" target="_blank" rel="noopener">Ministry of Power</a> has warned the states against levying extra fees on the production of electricity from different sources in the guise of development fees or charges.
It clarified that such supplementary charges, including any form of taxation or duty imposed on electricity generation, covering all types of generation such as thermal, hydro, wind, solar, and nuclear, are illegal and violative of the Constitution.
The Ministry had addressed this legal stance in a letter dated April 25, 2023, specifically concerning the imposition of water tax or cess by some states.
The Constitutional provisions in this regard are:
<ul>
<li>The authority to impose taxes and duties is explicitly outlined in Schedule VII. Entries 45 to 63 of Schedule VII detail the states&#8217; powers to impose taxes and duties. Any taxes or duties not expressly listed cannot be imposed by state governments in any manner, as the Union government retains residual powers.</li>
<li>Entry 53 in List-II (State List) grants states the authority to impose taxes on the use or sale of electricity within their own jurisdiction. However, this does not extend to the power to impose taxes or duties on the actual electricity production. This restriction is because electricity generated within one state&#8217;s borders can be used in other states, and no state is allowed to impose taxes or duties on the residents of other states.</li>
<li>Article 286 of the Constitution explicitly bars states from imposing any taxes or duties on the supply of goods or services, especially when the supply occurs outside the state.</li>
<li>Articles 287 and 288 further prohibit the imposition of taxes on the use or sale of electricity by the Union government or its purchase for the government&#8217;s own use or for use by government agencies.</li>
</ul>
Stakeholders had told Mercom earlier that state-specific levies on renewable energy projects were unfair. They were <a href="https://www.mercomindia.com/unfair-state-specific-levies-make-solar-expensive" target="_blank" rel="noopener">responding</a> to the levy of Harit Urja Vikas (green energy development) fee of ₹0.10 (~$0.0012)/kWh by the Madhya Pradesh government on electricity sold to non-DISCOM consumers. The fee was applicable to all renewable projects with consumers outside the state.
Subscribe to Mercom’s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don’t miss any critical updates from the renewable industry.

Government Warns States Against Imposing Hidden Charges on Power Generation

The Central Electricity Regulatory Commission (<a href="http://www.cercind.gov.in/" target="_blank" rel="noopener noreferrer">CERC</a>) has issued an advisory for the recent draft rules proposed by the Ministry of Power (MoP), asking it to work in harmony by honoring the respective jurisdiction carved out in the Electricity Act 2003.
The CERC has asked the MoP to consult with state governments before framing rules. The Ministry has recently <a href="https://mercomindia.com/electricity-act-amendment-draft/" target="_blank" rel="noopener noreferrer">proposed</a> new rules on various provisions like change in law, must-run-status, transmission system planning, recovery of inter-state transmission charges, and <a href="https://mercomindia.com/power-ministry-decides-late-payment/" target="_blank" rel="noopener noreferrer">late payment surcharge</a>.
The central regulator noted that the draft rules for Electricity Rules 2020 that cover clauses like change in law, and late payment surcharge rules, are available on the Ministry website; but those on transmission system planning are not available. It requested greater transparency and probity from the Ministry on such matters.
“The draft rules may not only be put on the website for wide publicity and soliciting responses of wider stakeholders, but the responses received may also be disclosed on the website for stakeholders at large to appreciate the impact of such rules,” noted CERC.
The Commission further added that the objective of the Electricity Act 2003 was to distance the regulatory responsibilities of the government and pass it on to the regulatory commissions. The Electricity Act 2003 demarcates the central government&#8217;s powers, state governments, central electricity authority, and the appellate tribunal of electricity (APTEL).
The CERC further noted that the central government could make the national electricity policy and the tariff policy in consultation with the state governments and the Central Electricity Authority (<a href="https://cea.nic.in/" target="_blank" rel="noopener noreferrer">CEA</a>). The central and state Commissions are to be guided by such a policy.
In light of the facts mentioned above, the Commission has advised the Ministry not to proceed with the framing of rules on these subjects. The Electricity Act 2003 envisages coordination between the central government and the Commission through various provisions.
Aditya K Singh, Associate Partner at HSA Advocates commented, “This letter has been issued by CERC suggesting the government to restrain from framing the proposed rules. CERC feels that the subjects covered under the draft rules are the substantive functions of the Central Commission. CERC further says the objective of the Electricity Act was distancing the regulatory responsibilities from the government and vesting it in the Regulatory Commission.”
Earlier, the MoP had <a href="https://mercomindia.com/electricity-act-amendment-draft/" target="_blank" rel="noopener noreferrer">issued</a> a draft proposal for the amendment of the Electricity Act 2003 to address contract enforcement, among other vital issues. The Ministry had invited for comments, suggestions, and objections from stakeholders. Many states have raised objections to the proposed amendments.

CERC Asks Power Ministry to Stay Out of its Regulatory Jurisdiction for Electricity Act

The Central Electricity Regulatory Commission (CERC) has issued regulations for Power System Development Fund (PSDF), which will come into effect from the date of their publication in the Official Gazette.
According to the CERC notification, the fund would be created by credits received from a variety of charges collected which include congestion charges that are in surplus after the amounts are paid to the eligible regional entities along with interest if any, according to the Congestion Relief Regulations.
Congestion amount realized from the difference in the market prices of different regions because of market splitting in power exchanges as per power market regulations will also be credited to the PSDF.
Surplus deviation settlement charges after payments made to the Regional Deviation Pool Account Fund against final settlement of claims according to the Deviation Settlement Mechanism Regulations will also be credited to the PSDF.
Other charges like reactive energy charges and additional transmission charges arising out of the explicit auction process in short-term open access advance bilateral transactions according to the CERC (Open Access in inter-State Transmission) Regulations, 2008 will be pooled into the power system development fund.
The notification further states that the PSDF will be maintained and operated through the Public Account of India.
Regarding the utilization of the PSDF, the funding for projects from PSDF to the entities should be in the form of grant, and the grant amount would be reduced from the capital cost of the project.
The CERC has further proposed that the PSDF be utilized for funding transmission infrastructure projects in response to feedback by the Load Despatch Centers to relieve congestion in interstate and intrastate transmission systems affecting the inter-state transmission systems (ISTS).
The fund will also be utilized for the installation of shunt capacitors, series compensators and other reactive energy generators for improvement of voltage profile in the grid.
It also proposes renovation and modernization of transmission and distribution systems for relieving congestion.
Regarding the approval of funds from PSDF, the CERC states that the central government may frame procedures or guidelines, either directly or through the nodal agency, for application, processing, sanction, disbursal, appraisal and monitoring of funds from PSDF.
The government has been investing in the development of transmission infrastructure, and the <a href="https://mercomindia.com/budget-2019-renewable-e-mobility/" target="_blank" rel="noopener noreferrer">Budget 2019</a> had allocated ₹10.35 billion (~$150 million) for the power system development fund.
Mercom had earlier <a href="https://mercomindia.com/indias-transmission-infrastructure-struggles-wind-solar/" target="_blank" rel="noopener noreferrer">reported</a> how on the lack of transmission infrastructure is a growing concern for solar, and wind companies.

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