Govt appoints consultant to examine coal linkage auctions

The government has asked SBI Capital Markets Ltd to evaluate whether coal linkages, through which projects get assured supply of the fuel at a discounted price, can be auctioned in an attempt to make the process of allotting the scarce natural resource to companies transparent. Buoyed by the success of the coal block auctions, the Bharatiya Janata Party (BJP)-led government is considering a plan to adopt a similar model for old and new coal linkages. Linkages are awarded to projects that do not have captive coal mines and need to source coal commercially from state-owned Coal India Ltd (CIL). “Even coal linkages have been done arbitrarily and were given in a subjective manner. The idea is now to study all the linkages that have been given and evaluate whether they and all future such linkages can be bid out in a similar transparent manner as the coal blocks,” said a senior government official, requesting anonymity. The plan to auction linkages follows reports of irregularities in granting coal linkages. To take advantage of the discounted price offered by CIL, developers of power plants had made false claims regarding the order of equipment, financial status, land acquisition and water supply, Mint had reported on 18 September 2012. Several firms assured of coal supply claimed to have placed orders for power generation equipment with manufacturers to strengthen their case—only, these were not really orders. Piyush Goyal, minister for coal, power, and new and renewable energy, said: “We have an open government looking at improving past practices. A team is studying the system of granting coal linkages. Once they come up with their recommendations, we will decide on the same. We haven’t made up our mind yet.”

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