KOLKATA (miningweekly.com) - In a bid to hasten the process of getting the coal sector back on the rails, the Indian government is considering increasing the number of coal blocks to be put up for the country’s maiden auction.

Considering the demand from thermal power producers with projects stranded by lack of dry fuel linkages, the government was working on increasing the number of coal blocks for auction from the initial 74 blocks as planned, an official in the Coal Ministry said.

The number of additional blocks to be added to the auction list would be decided within this week, as soon as the Ministry completed the process of identifying suitable blocks for the power sector, he added.

As things stood now, the auction list included 42 blocks that were already in production and 32 blocks where mining projects were nearing completion. The 74 blocks had the potential to produce 210-million tonnes a year of coal.

The additional blocks would be explored resources to enable power producers bidding at the auction to get them into production in the shortest gestation period, the official said.

Simultaneously, the government was also considering the option of allotting the additional blocks to power companies instead of putting them on the auction block along with the already identified blocks.

The government committed to putting in place systems to limit the possibility of power companies passing on higher electricity tariff rates to consumers and to offsetting extraordinarily high bids that power producers might have to put in at the auction to be successful in securing a coal block.

As a result, the possibility of allotment of the additional coal blocks based on competitive electricity tariff rates submitted by thermal power companies was also tabled, the official said.

The draft rules announced for the auctions have an enabling clause that permits the allocation of coal blocks, from among those cancelled by the Supreme Court, to any company which had been permitted to set up thermal power plants based on competitive electricity tariff rates submitted by them.

The electronic auction of the first lot of coal blocks would be held under the newly promulgated Coal Mines (Special Provisions) Ordinance which was brought into force to get the coal sector's house in order following the Supreme Court verdict, which cancelled mining licences of 204 blocks allotted by the government since 1993, as the process of allotment was deemed arbitrary and illegal.

The auction bids would start on February 11, the technical qualification process would be completed by March 3, financial qualification would be completed by March 6, and the blocks would be awarded by March 16.