The Coal Ministry is now considering implementation of a “reverse auction” model for the upcoming commercial coal mining in India.
The new model is being considered in the wake of private players criticizing the originally planned “revenue sharing model” for awarding coal blocks for commercial coal mining in the country. In the “reverse auction” model, the bidder who promises to charge the least from the ultimate consumer will be the block winner. The bidder will have to quote a minimum price (lower than a pre-fixed ceiling price), at which he will sell the coal. In accordance to the norms of the “reverse auction”, the lowest bidder will be allotted the block.
The rationale behind the planned shift in the auction model is that the “reverse auction” model is believed to be able to fulfill the government’s objective of providing cheap energy to the masses, especially to those who use the fuel for cooking.
The Coal Ministry plans to bid out 30 MnT of coal reserves in the first phase of commercial coal mining. In this type of coal mining, private players are allowed to mine and sale coal in the open market without any restriction on the end-use.
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