Coal auction to generate over $100 billion for states: Goyal

Says power tariffs will come down as benefits are passed on to consumers

Asserting that investors have no concern about the ordinance route being adopted for coal auction, Coal and Power Minister Piyush Goyal said the entire process would generate about $100 billion in royalties and auction proceeds for various states. “The ordinance has a weight of law. Any action taken under ordinance has complete protection as if it was done within the legal framework of the Act. Therefore, there are no concerns at all," Goyal said in an interview at the World Economic Forum (WEF) in Davos, Switzerland.

The minister, who held a series of meetings with the existing and potential investors in the power and coal sectors, and with various government leaders during his three-day visit, said: "The auction process is already on. People have started registering themselves on the website."

"The bidding process will start next month and all mines won in the bid would be legally tenable and can never go wrong. I don't think there is any cause for concern for any investor whatsoever," he added.

Asked about the revenue to be generated from the auction, Goyal said, "The entire revenue that comes out of this auction will either go to the states or to the people of India in the form of lower power tariff.

"I believe the eastern states - where most of the mines are located - particularly West Bengal, Odisha, Jharkhand, Chhattisgarh and Bihar, as well as Maharashtra and Madhya Pradesh, and to a small extent Telangana, stand to gain not less than Rs 5-7 lakh crores which is over $100 billion over the next 30 years from royalty and auction proceeds.

"Apart from that, you will see that power tariffs will come down significantly and the benefits that will be passed on to the consumers over the next 30 years would be enormous."

On the state of the coal sector in the country, the minister said coal production in India had stagnated at about 1-1.5 per cent CAGR (compounded annual growth rate) over the past four to five years.

“We came into the government on May 26, 2014, and from June to December, the coal production was up by 8.4 per cent. In fact, between October and November, the coal production was up 14 per cent over the last year," Goyal said.

He added: "Also, electricity generation in the first six months of our government went up by one  per cent. These are also records on the Indian perspectives."