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Rediff.com  » Business » E-auction: Govt finalises formula to calculate coal price

E-auction: Govt finalises formula to calculate coal price

November 12, 2014 13:05 IST

A coal minerCoal ministry will suggest the method of calculating the reserve and floor price of coal in the 74 cancelled coal blocks, which will go under the hammer through e-auction next month

In one of the first steps towards coal block re-allocation, the government has finalised the methodology to calculate coal price for e-auction and a Cabinet proposal on this is likely to be floated in a fortnight.

The coal ministry will now suggest the method of calculating the reserve and floor price of coal in the 74 cancelled coal blocks, which will go under the hammer through e-auction next month.

Government officials had earlier said the reserve price of coal would be decided on the basis of international market prices when the auction commences.

It would amount to 10 per cent of the value of coal reserves in a mine.

This methodology is part of the rules that the government would issue before starting the e-auction of coal blocks, promised in an ordinance last month.

The process of notifying rules would take place along with the introduction of a Bill in Parliament, so that the way out of the impasse would not be delayed.

Piyush Goyal, minister for coal, power and renewable energy, had said on Friday the coal ordinance would be placed in the Winter Session of Parliament.

“The government is confident that the opening of the sector and reallocation of mine would be enough to meet the demand of the power sector,” Goyal had told reporters last week.

In the first phase, 74 blocks will be auctioned.

The Supreme Court, on September 24, had ordered cancellation of allocation of these blocks -- 42 operational and 32 in line to start production -- with effect from April 1, 2015.

These mines would now be offered only to developers with projects in notified end-use such as steel, power, cement and coal washing.

BS Reporter in New Delhi
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