The coal block auction process witnessed another day of intense bidding that could break the record for price offered for mines in both power and unregulated sector even as eastern states reap rich harvest in terms of revenue accrued through auction.
At the end of Wednesday’s auction, all the operational mines reserved for power sector have been awarded. Bidding for Tokisud North, previously held by GVK Power, was on at the time of going to press.
The auction will continue till Sunday with 6 more operational blocks reserved for unregulated sector to be bid out. The highest bid price for Tokisud North was ruling at over R1,000/tonne while Gare Palma IV/5, reserved for unregulated sector and previously held by Monnet Ispat, had reached a bid price of R2,658/tonne.
As per official estimates, the states, where 11 of the mines auctioned till Tuesday are located, will earn a massive R60,000 crore in revenue over 30 years. Coal ministry estimates say that the total earning to the states after 110 mines are awarded this fiscal could exceed R15 lakh crore over 30 years. Coal secretary Anil Swarup said that the benefits of coal auction will be accrued to states where the mines are located and also to those states that are fed by end-use plants through reduction in tariff. The coal secretary, however, also said that the next round of auction that will feature blocks from Schedule III – near operational mines – will likely not see the same level of bidding as those mines would require the end-users to invest substantial capital before coal can be extracted.
“Every Rs 100 drop in the coal procurement price from the previously quoted coal price in the power purchase agreements will lead to a reduction of 6 paise in tariff,” he added.
The current round of auction has seen blocks earmarked for power sector going below Rs zero mark in reverse auction implying that the consumers will not pay for cost of coal, a component of tariff that accounts of nearly two-third of the entire tariff.