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Coal auction not to increase power tariff?

business Updated: Dec 08, 2014 22:56 IST
HT Correspondent
HT Correspondent
Hindustan Times
Coal block

The upcoming auctions and allotment of coal mines are unlikely to send retail power tariff up, going by the changes in proposed guidelines suggested by the ministry of power and an inter-ministerial committee (IMC).

The Cabinet Committee on Economic Affairs is expected to examine the final recommendations soon. Before that, the coal ministry will deliberate on the inputs received from the ministry of steel, Department of Industrial Policy and Promotion, department of economic affairs, and department of legal affairs in law ministry.

“A fixed reserve price of Rs 100 per tonne of coal shall be payable, as per actual production by the successful allotee. The statutory royalty payable on coal will continue to be governed as per extant rules. This would ensure there is no adverse impact on power tariff,” according to a document for the proposed Cabinet draft note.

The IMC was set up to examine the fixing of floor price and reserve price of coal blocks and other coal mining and operations, including production.

In addition, the power ministry has suggested that up to 20% of power may be sold on commercial rates, for which an additional cost may be paid by the bidder.

The coal ministry in its note has stated that the proposal will streamline the procedure of auction and allotment of coal mines or blocks in a manner that will benefit the economy as a whole. It will also promote optimum utilisation of coal resources in line with the country’s requirements.

The proposals for the draft have suggested allotment of coal blocks through neutral transparent process.

“It should have minimum impact on end consumers’ retail tariff and limited impact on projects affected by de-allocation,” the proposed note says.

Further, the power ministry wants a level-playing field for the potential bidders as well as less regulatory or legal procedures.

The proposal has been drawn up by the coal ministry to prepare the draft Cabinet note, as provided in the Coal Mines (Special Provisions) Ordinance, 2014 and on the basis of recommendations of the IMC.