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Publish Date : 03-Feb-2015

In a departure from the practice of offering linkages based on proposals of the standard linkage committee (SLC), the government is now weighing competitive bidding for coal linkages as well, after it set the ball rolling on coal block auctions. At the inter-ministerial committee's (IMC) initial meeting to talk over competitive bidding and letters of agreement (LoA), which are released by Coal India (CIL) and its arms, it was said that the coal giant would hire an external consultant to suggest bidding methodologies for various sectors.

During the meeting, the power ministry spokesman suggested that the method to assign coal linkages should be able to pass on the benefit to consumers via tariff-based competitive bidding. However, he added that the prior pledge of 34,000 MW of LoAs, which have not been turned into fuel supply agreements (FSAs), would have to be met before new linkages are granted.

The meeting of the first IMC's minutes said : "The terms of reference (for external consultant) could be to examine various structures and implementation models for auction of coal linkages/LoAs and other such market-based mechanisms and to recommend the optimal structure that would meet the requirement of all the stakeholders. It was decided that CIL be requested to engage such an external consultant at the earliest."

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