Coal news and updates

Ask CoalMin to draw auction roadmap: PowerMin to PMO

The power ministry has petitioned the Prime Minister’s Office to direct the coal ministry to finalise a policy on auctioning of coal blocks for companies whose functional mines have been de-allocated by the Supreme Court. It has suggested that pending a blueprint on auctions, the coal ministry should ensure steady fuel supplies to the firms.

The coal ministry is yet to come out with a plan to auction blocks for 20 fuel-starved electricity generating firms identified by the power ministry, which are now seeking to import coal to meet their production needs. The Supreme Court had last month cancelled allocation of all but four blocks belonging to both state-run and private companies allocated since 1993.

A source in the government said the power ministry has written to the PMO on October 1 suggesting that supplying fuel to the companies which have six months time to abandon their allocated mines has emerged as a major concern and “the coal ministry will need to formulate a policy for appropriate coal linkage or block (through auction) to their end use power projects in consultation with power ministry.”
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Soon after the apex court’s verdict on the captive mines, the coal ministry has begun deliberations at length on the viability of ‘production-linked payment’ mechanism for executing the auction process and also mandating successful bidders to adhere to a ‘minimum work programme’ to ensure time-bound development of the bidded blocks.

A view seems to be emerging that a way to auction the blocks could be to resort to production-linked payment on a rupee-per-tonne basis, along with a basic upfront payment of 10 per cent of the coal block’s intrinsic value. But the source said it would take some time to arrive at a consensus on the issue.

The situation is even more precarious for extending linkages as Coal India has already committed fuel supplies to 78,000 Megawatts following a Presidential directive imposed on it under the erstwhile UPA regime. A top official of the world’s biggest coal mining company told this newspaper that applications for linkages of 30,000 Mw has been pending and the PSU has not been able to cater to them. “So any fresh demand for further linkages is unlikely to be met,” the official reasoned.

The power ministry is of the view that while the coal ministry de-allocated 80 coal blocks before the SC cancelled the allocations, a contingency plan should have been in place and a consensus secured.

Source: The Indian Express