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Home News Power Sector News Centre plans to allocate coal blocks to state owned discoms only

Centre plans to allocate coal blocks to state owned discoms only

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Coal blockIn its first major course correction after the coal allocation controversy broke, the Centre is considering the option of restricting the allocation of coal blocks to only state-owned electricity distribution companies (discoms), instead of the current practice of giving out mines and blocks to project developers across the board, including private sector generation firms.

According to the new plan, discoms would, instead, be entrusted to hand over blocks to state-owned or private sector developers chosen to set up power projects through the tariff-based competitive bidding route.

"There is a strong view within the ministry (of power) on offering blocks only to state-owned discoms who will then hand these over to the chosen developers," a senior government official involved in the exercise said.

The states, as a consequence, would be expected to take a call on where the power project associated with a mine block awarded to it is to be located, as well as undertaking the preparatory work involved in getting the mine operational.

The move, if it passes muster, also fits well with new public-private partnership model being adopted for developing power projects, under which the current Build Own and Operate (BOO) model is being changed to a Design, Build, Finance, Operate and Transfer (DBFOT) model. Under the new model, the power plants would be transferred to the contracting discom at the end of the project life, usually 25 years.

The DBFOT model alters the basic framework under which power projects are offered to developers currently, wherein the latter own and operate the plant in perpetuity. Under the new scheme, the land and asset ownership remains with the contracting party (the discom) and not with the project developer.

These changes have been incorporated in the revised standard bidding document (SBD) readied by the government — covering projects offered to developers under what is termed the 'Case II' bidding route that was followed for awarding the Ultra Mega Power Projects.

This comes at a time when the Supreme Court which is hearing PILs seeking cancellation of the coal block allocations to the private sector has turned the heat on the Centre by seeking several clarifications relating to the policy and guidelines adopted. The CBI has undertaken a probe against every company allotted a coal block since 1993 and in particular during the period 2006 to 2008.

Hitherto, the coal block allocations followed two stages. While recommendations to allocate blocks to power and cement were made by states and ratified by the Centre, the guidelines for comparative evaluation of applicants were framed by the Centre.

Till 2009, the government had allocated 196 blocks through a screening committee route. An inter-ministerial panel headed by the coal secretary, with representation from state governments, had recommended the allocation.

However, in its audit report tabled in Parliament in August 2012, the CAG had said there was no comparative evaluation.

Source - Indian Express


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