Having successfully completed the coal block auction earlier this year, which netted the exchequer in excess of Rs 2 lakh crore, the government is now preparing to auction coal linkages for the unregulated sector. A coal linkage is an assured commitment of supply by government monopoly Coal India to various end users as such power, steel and cement plants, and it is one of the two ways (other being e-auction) that Coal India sells the mineral. “A government committee has accepted recommendations of a report by SBI Caps [that called for spectrum-like auction of e-linkages] ,” Coal Secretary Anil Swarup told CNBC-TV18 today.
“The objective is to make price determination market-driven. We will attempt to work out a system by June 30.” Swarup made it clear that linkage auctions would only be conducted for ‘unregulated’ sectors such as steel and cement and not for the power sector, where the government attempts to keep the price under control to shield consumers. He also discussed the recently concluded coal auctions, in which a handful of mines were allocated directly to end users, and said five blocks have already started production and the rest will start soon.
The coal secretary further said that agreements with power companies during the auction made it clear power tariffs would not be revised higher, and commenting on reports that some companies are looking to seek legal recourse, said he was confident the arrangement would “withstand the test of examination”. Finally, Swarup said the government was also working on bringing about the final wave of reform, in which coal would be allowed to be exploited by commercial mining companies, as opposed to Coal India and end users currently, and said he was hopeful it would come through this fiscal.