Breather on coal supply

A request by power companies that the government allocate captive coal blocks after June 2004 may now be considered. The coal and mines ministry had earlier set a deadline of June 28, 2004 for receiving applications.

The power ministry has sought relaxation of the guideline because a decision on auctioning coal blocks is still pending.

Senior coal ministry officials told Business Standard that only a few applications were received after the date and that these would be considered by the screening committee which allots the blocks.

In a recent letter to Coal Secretary PC Parakh, Power Secretary RV Shahi had requested that the allotment procedure for coal blocks be streamlined.

The power ministry also wants routing of bids through the screening committee continued without any competitive bidding, pending finalisation of the procedure for allotment of coal blocks.

The coal ministry had moved a Cabinet note for auctioning blocks but the policy was reviewed following objections from the ministries of power and steel.

Officials said these ministries feared that auctioning blocks would lead to an increase in coal prices and would be detrimental to the interest of the industry.

Auctioning, however, continues to be on the agenda of the government in the long-term, said an official.

"The power ministry, in principle, agrees with auctioning but feels that in a scenario where there is a 50 million tonne annual demand-supply gap it would lead to coal becoming expensive thereby increasing the cost of power," he said.

The power ministry also wants transparency in the present allotment of coal blocks.

"A committee or a task force should identify coal blocks for captive mining rather than Coal India or its subsidiaries influencing such a decision. Only difficult mining blocks are being earmarked for captive coal mining," he said.

The government plans to allot 138 coal blocks for captive mining for which screening committee meetings are taking place on a regular basis.