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Apr 02, 2012, 08.09 PM | Source: CNBC-TV18

Captive coal blocks may sell power via tariff-based bids

The county is facing power crunch due to acute coal shortage. CNBC-TV18 learns from sources that the Power Ministry wrote to the Coal Ministry on March 29, 2012. It said that benefits of government allotted coal blocks must go to consumers.

Siddharth Zarabi

Economic Editor, CNBC-TV18

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CNBC-TV18 learns that all captive coal blocks will have to sell power via tariff-based bids. This as the government wants the consumers to benefit from the allocated blocks, reports Siddharth Zarabi.

The important news is that all companies that have got captive coal blocks, once the formal orders are issued, will necessarily have to sell the entire power via competitive bids.

This move has been initiated by the power ministry, which has now written to the coal ministry, specifying that the benefits of all the blocks allotted by the government must go to consumers. In the projects, which are going to come up this year, the condition will be in the paper work. Even for projects, which are already up, it is quite possible this sale of power only via the competitive route could also be written as a condition that will ofcourse apply from a specific date.

So, in some ways, even as the entire issue of the CAG’s final report still remains pending, the government is trying to stem criticism by atleast ensuring that if the blocks have been allotted in the manner in which they have, consumers across the country should benefit from competitive tariffs.

The power ministry has written to the coal ministry stating that non compliance of norms laid by the government should lead to cancellation of allotted coal blocks.

However, the Comptroller and Auditor General of India (CAG) has criticised allocation of captive blocks to private players.

Meanwhile, the country's largest coal producer Coal India is expected to sign fuel supply agreements (FSAs) with power companies in a day or two, coal minister Sripraksh Jaiswal told reporters.

The company's board had three inconclusive meetings in the past where the proposal to pay penalties on failure to meet 80% of the committed fuel supply did not go through.

If need be, the government may issue a presidential directive to force Coal India to commit fuel supply to private power producers.

The domestic supply has fallen short of targets due to regulatory obstacles and poor infrastructure for transporting imported coal. Coal shortage touched 84 million tonne in the last fiscal and is likely to spike to 137 million tonne in the current fiscal adding to power supply woes.


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