Indian power companies may get not new coal mining blocks through
auctions and instead the government may allocate it to companies that offer to
sell electricity cheapest, said a government source on Monday.
“Auctioning of blocks will happen for cement and steel
companies. But for power it will be through competitive tariff-based
bidding,” a senior coal ministry source said on condition of anonymity as
the matter is still under discussion.
By using a method linked to tariffs, the government hopes to
keep electricity costs low. The call for auctioning of coal blocks has grown
following a leaked report by the federal auditor that accused Prime Minister
Manmohan Singh's government of giving up $211 billion in potential revenues by
giving away coal assets too cheaply.
The coal ministry is appointing a consulting firm, probably
within a month, to help with the auctioning and expects to finalise reserve
prices for the blocks in the next four months, the source said.
Power companies are likely to be attracted to the bidding as
blocks will provide them with an assured supply of a fuel, shotages of which
have crippled expansion in the sector and forced many power plants to run below
capacity.
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