Millennium Post

‘Power consumers will gain Rs 30K cr from coal auctions’

As per official estimates, auction of coal blocks will fetch over Rs 1 lakh crore, including royalty, to six states. “The first round of coal block auctions for 19 mines will fetch the government over Rs 1.3 lakh crore of which over Rs 30,000 crore will be savings from reduction in power tariff,” Goyal told reporters on the sidelines of an event, ‘Budget Aaj Tak’, here.

In the reverse bidding adopted for coal auction, government had set a ceiling price that was representative of production cost of Coal India. The private sector companies, which are considered more efficient, were expected to bid at lower price.

For example, if the ceiling price is Rs 1,000 and the bidder bids Rs 800, then the benefit of Rs 200 is directly passed on to consumers. This would mean if the power is sold at Rs 3.50, out of which is Re 1 is cost coal and the same will become 80 paise because of pass through benefit of Rs 200. Thus the new price of power will be Rs 3.30 per unit.

In case the bids touch zero, meaning that the private producer is ready to pass on the benefit of coal extraction to power consumers, there would be a forward bidding.

Of the total 204 coal blocks whose allocation was cancelled by the Supreme Court in September 2014, 19 were auctioned in the first tranche that concluded on Sunday.

Madhya Pradesh, Odisha, Jharkhand, West Bengal and Chhattisgarh and Bihar are the six states which will get Rs 1 lakh crore from the auction.

Hindalco Industries has bagged the maximum number of mines - three two in Chhattisgarh and one in Jharkhand. Other companies include Balco, Reliance Cement and GMR. In the entire auction, the lowest closing bid price was Rs 108 per tonne for the Gare Palma IV 2 & 3 coal blocks in Chhattisgarh, won by Jindal Power Ltd.

The highest closing bid price was Rs 3,502 per tonne for Gare Palma IV/5 coal mine in Chhattisgarh alloted to Hindalco Industries.
Next Story
Share it