An inter-ministerial panel is likely to meet on
Tuesday to discuss the methodology for fixing reserve price for auction
of coal blocks. The committee, comprising secretaries of ministries of
finance, power, steel, law, mines, petroleum, industrial policy and
promotion and coal, in the meeting would deliberate upon the auction
start price or the reserve price for allotting coal blocks, whose
allocation was cancelled by the Supreme Court recently.
This
development comes after Supreme Court (SC) on September 24 had
cancelled allocation of 204 coal blocks to various companies between
1993 and 2009. Out of these, 37 were running coal mines and another five
were ready to produce by April, 2015.
Auctions of
these cancelled blocks were planned since there were many existing
power plants, which were linked to these mines, or power plants, which
have no tie-up for coal and would either have cost-plus power purchase
agreements or would have contracted agreements to sell electricity on
the basis of bid tariff. Nevertheless, the government sensed the need to
revise the methodology decided by the IMC previously.
The
government had in 2012 constituted an IMC to consider and examine the
formulation of methodology for fixing floor/reserve price of coal blocks
to be allocated through auction.
However, based
on recommendations of consultant Crisil, it proposed allotting coal
blocks only to government companies or to power plants with tariff-based
bidding, to ensure that the benefit of cheaper domestic coal is passed
on to consumers.
