16 NOV, 2012, SARITA C SINGH, ET BUREAU
NEW DELHI: The government has decided to offer discount on coal blocks' prices being offered to power companies in the auction set to begin in a few months, coal secretary S K Srivastava said.
The coal ministry is, however, yet to decide the rate at which discount will be offered and is holding consultations with state governments that will get the entire auction money. Srivastava said the decision has been taken to ensure low electricity tariffs and all stakeholders including state governments have agreed to it.
"It has been decided to give a discount to power sector companies as otherwise the auction will result in higher electricity tariffs," he said. "The question is how much discount should be offered. The state governments have also been involved in the exercise since there should be a balance between state revenues and power tariffs."
Blocks earmarked for power sector will be given to state governments, which will award the mines to companies that quote lowest tariff for electricity supply. Power companies will pay a 'reserve price' for each block on which the coal ministry plans to give discount.
The decision to give discount to power firms follows a recommendation made by CRISIL Infrastructure Advisory, a consulting firm appointed to assist the ministry in fixing prices of captive coalmines. It has recommended that price for each block be determined by estimating cash flow projections of a project. The estimated cash flow should be adjusted against the estimated capital cost to mine the block over 30 years to arrive at its value.
"India's power needs are rapidly rising," CRISIL had said in its draft report on methodology for calculation of price tags of coal blocks. "In 2011-12, the peak load demand-supply deficit stood at 10.6%. As any increase in electricity prices may have a cascading inflationary impact on India's economy, one of the key objectives that the government may set is to keep the electricity prices at an affordable level." A top coal ministry official said coal block allocation to government companies may begin before the end of this fiscal.
The coal ministry has identified 54 coal blocks with over 18,000 MT reserves for allocation to private and government companies. While 45% of the blocks have been earmarked for the power sector, about 25% each have been earmarked for steel and state mining corporations.
NEW DELHI: The government has decided to offer discount on coal blocks' prices being offered to power companies in the auction set to begin in a few months, coal secretary S K Srivastava said.
The coal ministry is, however, yet to decide the rate at which discount will be offered and is holding consultations with state governments that will get the entire auction money. Srivastava said the decision has been taken to ensure low electricity tariffs and all stakeholders including state governments have agreed to it.
"It has been decided to give a discount to power sector companies as otherwise the auction will result in higher electricity tariffs," he said. "The question is how much discount should be offered. The state governments have also been involved in the exercise since there should be a balance between state revenues and power tariffs."
Blocks earmarked for power sector will be given to state governments, which will award the mines to companies that quote lowest tariff for electricity supply. Power companies will pay a 'reserve price' for each block on which the coal ministry plans to give discount.
The decision to give discount to power firms follows a recommendation made by CRISIL Infrastructure Advisory, a consulting firm appointed to assist the ministry in fixing prices of captive coalmines. It has recommended that price for each block be determined by estimating cash flow projections of a project. The estimated cash flow should be adjusted against the estimated capital cost to mine the block over 30 years to arrive at its value.
"India's power needs are rapidly rising," CRISIL had said in its draft report on methodology for calculation of price tags of coal blocks. "In 2011-12, the peak load demand-supply deficit stood at 10.6%. As any increase in electricity prices may have a cascading inflationary impact on India's economy, one of the key objectives that the government may set is to keep the electricity prices at an affordable level." A top coal ministry official said coal block allocation to government companies may begin before the end of this fiscal.
The coal ministry has identified 54 coal blocks with over 18,000 MT reserves for allocation to private and government companies. While 45% of the blocks have been earmarked for the power sector, about 25% each have been earmarked for steel and state mining corporations.
No comments:
Post a Comment