RS panel to quiz CoalMin on reverse auctions for power sector

The committee headed by Anil Madhav Dave is scheduled to give its report to the house on Wednesday.

The select committee of Rajya Sabha on the coal bill is expected to quiz the government about the current round of auctions. Highly placed sources said the committee will especially want to know from the coal ministry about the reverse auctions employed for the power sector.

The committee headed by Anil Madhav Dave is scheduled to give its report to the house on Wednesday two days before Parliament adjourns for a month-long recess.

Neither the coal mines ordinance or the bill which seeks to replace it mentions the scope for reverse auction with a ceiling price as one of the options to be followed. They mention the word floor price and reserve price, though.

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Vinayak Chatterjee, chairman Feedback Infra said “It is like providing different types of tickets for the same travel requirements depending on the needs of the passengers”. Sanjay Sen, a senior advocate in the Supreme Court said, “The concept of ceiling price goes beyond what the bill has provided for”.

A source within the committee said they would like to hear from the government if the omission could create a ground for legal obstacles later. The source also referred to the 1993 Amendment of the Coal Mines (Nationalisation) Act where there was no reference to the screening committee because of which the device was consequently rejected by the Supreme Court as invalid.

The reverse auctions have also drawn curiosity as the bids have varied a lot. For instance, for the Tara coal block Jindal Power has quoted a winning bid of Rs 126 per tonne while Amelia (North) block has drawn a bid of Rs 712 per tonne. While in both cases the firms are committing to pay the respective state governments these sums for each tonne of coal they will mine, the difference in price quoted has been substantial.

Power minister Piyush Goyal has said in Parliament, “… The total estimated amount of revenue likely to be generated from 33 coal mines already auctioned is Rs 2,09,740 crore”. He has also noted auctions will cut power fuel cost by about Rs 96,971 crore. But former power secretary Anil Razdan said the bids defied logic. “The companies are gambling on huge improvements in their efficiencies to make this bidding work, as I see it”.