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| Coal for UMPPs not to be auctioned |
| Press Trust Of India / New Delhi Feb 23, 2009, 00:56 IST |
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Power majors like Reliance Power and Tata Power are set to save on the huge cost they would have incurred in buying coal blocks through auction, as the government is not in favour of the proposed competitive bidding route for allocating reserves for certain projects.
“Competitive bidding shall not be applicable to an area containing coal where such an area is considered for the allocation to a company or corporation that has been awarded a power project on the basis of competitive bids for tariff including Ultra Mega Power Projects (UMPP),” says the draft Mines and Minerals (Development and Regulation) Amendment Bill, 2008.
Even as the companies stand to gain from the proposal, the government may lose on the additional revenue it would have generated through auctioning the blocks. About the basic cost to be incurred during auctioning of the coal blocks, the Bill says, “... The notified price of coal as fixed by state-run Coal India Ltd and Singareni Collieries Company Ltd and the import price of coal would be available as benchmarks.”
Last year, the government had proposed amending the MMDR Act, 1957, governing the process of exploration, mining and allotment of coal and lignite blocks to bridge procedural lacuna in the process of allotment apart from ensuring more revenues to the state.
At present, a screening committee under the coal ministry approves the allotment of coal blocks to public and private companies for captive use. However, PSUs will have an edge over the private firms as they could also be given coal blocks outside the bidding process, the Bill says. “Auction by competitive bidding shall not be applicable to an area containing coal or lignite where such area is considered for allocation to a government company or corporation for mining or such other specified end-use,” the Bill adds.
The power and steel firms have been demanding speedy allocation of the mining blocks to meet their production targets in time. At present, around 196 coal blocks with an estimated reserves of 42 billion tonnes have been allocated to various firms. The government will be allocating around 90-95 captive mining blocks this year, out of which 70-75 would be of coal.
Coal reserves in India stand at about 264.5 billion tonnes. Proven reserves are estimated to be 94-95 billion tonnes.
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