Having begun e-auction of coal blocks, the Government, in another significant move is planning to give away coal linkages through the competitive bidding process to end-users like the power, steel and cement sectors. Users which don’t have captive blocks are normally given linkages by the Government on a short term basis.
According to sources privy to the development, coal linkages, which are normally allotted through a standing linkage committee of the Coal Ministry, will now be given through a competitive bidding process with the aim of maintaining transparency in the entire process. An inter-ministerial panel is to be set up soon, which will decide the modalities of the auction process, they added.
They further said that the inter-ministerial committee may include representatives from ministries of power, steel, railways, and law apart from coal. This panel will thrash out the various pros and cons to arrive at a desired model for conducting the bidding process. Additional Secretary in the Coal Ministry A K Dubey may head the panel.
The move is being contemplated by the Coal Ministry at a time when the e-auction process of 214 coal blocks which were cancelled by the Supreme Court last year, is underway. Apart from coal linkages, sources pointed out that the Government may also put up for bidding the letters of assurances (loA) which are given to entities that are offered the linkages.
Sources further said that though till now the standing linkage committee of the Coal Ministry had been issuing the loAs as well as the linkages, considering the brouhaha created by the coal block allocation scam where the main allegation was that reserves were given away on a nomination basis, the Government has decided to play it safe by choosing the bidding route for this process also.
There is a likelihood that representatives from the newly structured NITI Ayog and Singareni Collieries Company ltd may also be part of the inter-ministerial panel. Coal Minister Piyush Goyal is learnt to have given his consent for the formation of the panel. In the meantime, the e-auction process of coal blocks has picked up steam as the short listing of bidders is to be done on February 8.
The Coal Ministry is hopeful of getting a good response for the auction of coal blocks, as according to sources, new entrants in the coal sector which require blocks for their end-use plants, are likely to show more interest in the process. Once the final allotment of coal blocks gets completed by the second week of March, the Coal Ministry is likely to start the process of directly allotting the blocks to State-owned companies.