Centre to e-auction cancelled coal blocks

Government is hopeful that the power tariff will not rise too much as it has put in place norms to regulate the bid war. Coal ministry on Wednesday placed in public domain draft rules for auction or allocation of 204 coal blocks cancelled by Supreme court. As per these draft rules mines will be allocated only for specified end-use like power generation and there will be a cap on number of blocks a company can bid for.

“These rules will provide a sense of certainty to the business environment and enhance credibility of the process,” said coal secretary Anil Swarup. He said that it is the endeavour of the government that power tariff does not rise due to auction. “It is not a revenue maximising process. It is essential to keep a lid on tariff,” he said. Government plans to auction 72 coal mines in the first lot. Of these, 42 are ones which are currently under production and where Supreme Court had allowed continuation of operation till March 31. The remaining 32 are ones which are ready to produce.

The coal secretary said that the government will ensure that the blocks are not monopolised by one entity. “To avoid monopoly, a cap on the number of blocks a company can bid for will be put in place,” said Mr Swarup.

The winner will have to pay the winning price for the coal block and also a fair value for the plant and equipment already installed at these mines. Existing operator of these mines will get the fair value of his investment but will not have first right of refusal or the right to match the best price.