Coal block allocation: FinMin frowns on discount to power sector

Wednesday, 09 January 2013 10:35 Lathish PV
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Coal BlockThe Finance Ministry has raised concerns on the proposed discount on reserve price of coal mines to be offered to power companies. "The Finance Ministry wants to understand the entire allocation process – the revenue to be generated by allocating these mines and if power producers should be offered a discount," a senior Government official said.

The Finance Ministry query has come as surprise because the Government has been saying that auctioning of coal blocks is not targeted at revenue generation. The Power Ministry has mooted a proposal to offer 90 per cent discount to power producers on the reserve price for coal mines.

The Power Ministry's view is to facilitate cheap coal to power producers that would keep electricity tariffs low. At the same time, the Steel Ministry has not sought any discount on coal mines, as steel manufacturers are free to price their products at market rates.

The Coal Ministry has invited applications from Central and State public sector utilities to bid for 17 coal blocks, of which 14 are earmarked for power sector. The applications are to be submitted by January 30.

"The reserve price for the 17 mines on offer is yet to be determined, which would be done in due course. These would be allocated to Government companies, so submission of reserve price can be decided at a later stage," the official said.

With an exception of three blocks, others are not explored. This is a hindrance to determine the reserve price.

The last day for submission of applications may be extended to mid-February, said the official. This is because the Government is yet to arrive at a conclusion on issues such as green clearance and discount to power producers.

Source- Hindu