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.
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