India’s power ministry disagrees with coal ministry’s proposal to offer coal through e-auction to all sectors

India’s Union power ministry disagreed with the Union coal ministry’s proposal to e-auction coal from Coal India to cater to all sectors including power with the non-regulated sectors like steel, aluminium, cement amongst others.

The ministry has agreed that the proposal is forward-looking and futuristic but the coal industry is not matured for the market-based discovery of price.

The RK Singh-led power ministry has said that clubbing of all e-auctions in one window will increase prices of coal and eventually increase the cost of electricity generation, burdening the electricity consumers. It highlighted that any increase in electricity price will be detrimental to the government’s aim to provide affordable power to consumers.

It also raised the concerns that the power sector may get a lesser quantity of coal due to aggressive bidding by the non-regulated sector companies. Even the private power sector companies are opposed to the idea of clubbing all e-auctions by coal companies, proposed by the coal ministry.

The power ministry has requested the coal ministry to keep the special forward auction window for the power sector to be kept outside the single-window auction proposal.

The coal ministry had brought in the single window e-auction proposal with an aim to bring in a level playing field and a single reserve price, as dual pricing leads to market distortion. It has also proposed to offer coal transport under single window e-auction only through rail mode.

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