NEW DELHI: At a time when the government is under pressure to explain its position on allocation of captive coal blocks, the power ministry has recommended cancellation of allocations to power companies not selling electricity through rate-based bidding.
In a letter to the coal ministry, it has made a case for such stringent action on the reasoning that the benefit of lower-cost coal has not been passed on to consumers. It has asked the coal ministry to issue an advisory to all block allocates, to take part in bids for sale of power from end-use projects according to the guidelines of the ministry of power or face cancellation.
Also, the power ministry wants the condition on rate-based bidding to be made a condition for even already-allotted blocks to independent power producers (IPPs).
Making a case for passing on the benefit of low-cost coal to consumers in the form of lower rates, the power ministry said a large number of coal blocks had been allocated to the private sector, to both IPPs and captive power producers. The allocates were expected to take part in the rate-based competitive bidding process that has been made mandatory for distribution companies.