Bengal may take the auction route

An initial report by the Comptroller and Auditor General (CAG) citing a huge estimated loss to the central exchequer over coal block allocation in the country has prompted the Trinamool Congress-led government in West Bengal to go for auction as the pertinent procedure from now.

“We will auction all coal blocks,” the state’s commerce and industry minister, Partha Chatterjee, said. “We are not in favour of the first-come-first-served policy.”

Allocation is currently over in six of the state’s 15 coal blocks. Chatterjee has written to Union coal minister Sriprakash Jaiswal for speedy allocation of the pending nine blocks. If Bengal ultimately auctions its blocks, the decision would be akin to those of Bihar, Chhattisgarh, Goa and Jharkhand.

Coal blocks are allocated to state development corporations through the government route, where the state body has to hold a majority stake. For the balance, the state development corporation can invite bids from private companies.

“Auction is the most transparent route,” according to Chatterjee. “I have questioned the previous (Left Front) government’s policy of coal allocation. It should be probed.” Several coal block allocations have found mention in the CAG report.

Soon after taking charge of the state in May last year, the chief minister had questioned coal block allocation in the state, especially regarding theose for JSW Steel and Jai Balaji Industries. Three of the six blocks the Left Front government received had been allocated to JSW Steel’s Salboni project. Two went to Jai Balaji, while the West Bengal Mineral Development and Trading Corporation got one. JSW is setting up a 10-million-tonne steel project, while Jai Balaji has a five-mt steel project in the pipeline.

The new government, too, plans to give preference to companies that value-add. Chatterjee says companies doing value addition, like steel, will get preference in the auctions.

Value adders have welcomed the auction policy. CESC will be “looking forward” to this auction, “even though we already have linkages in place for our existing projects”, according to managing director Sumantra Banerjee. “This is a positive sign for power producers in the state starving for coal.”

Experts, however, point out that the allocation through the government dispensation has not so far been charged by the Centre, though there is some talk that it may not be free henceforth.