KOLKATA (miningweekly.com) - Stung by opposition from small-scale industries (SSI) against plans to auction coal supply linkages, India’s Coal Ministry was likely to reserve a number of coal blocks exclusively for supplies to SSIs.

According to an official, the Ministry was working to reserve a few coal blocks in the next round of auctions for exclusive bidding by mining companies owned and operated by provincial governments, which, in turn, would set aside the coal mined for exclusive supply to industries categorised as SSIs.

Though the number of such coal blocks to be reserved was yet to be determined, the Ministry still had over 200 coal blocks to be allocated through auction after completing successful auctions of 67 blocks over the past two months, the official added.

Soon after completing the first three rounds of coal block auctions and setting the ball rolling for the auction of other mineral resources, the Indian government decided on adopting the auction route to grant coal linkages to bulk consumers in the power, cement and steel sectors. A committee, including the chairperson of coal producer Coal India Limited (CIL), has already been formed to lay down the roadmap for the auction of coal linkages.

The move was to ensure a ‘fair price’ for CIL, which sold coal in the domestic markets under long-term supply agreements with user industries and, for most of the time, far below prevalent international prices of the dry fuel.

However, a large number of industries falling under the SSI category and dependent on coal supplies from CIL, as well as a number of industry representative bodies, have come out opposing the move. It was argued that such SSIs did not have the financial capability to participate in competitive bidding and would, as a result, be starved of coal for their small units.

The Confederation of Indian Industries has decided to carry out a detailed study on the impact of auction of coal supply linkages on small industries, at the behest of a large number of its members, including sponge and pig iron plants largely located across coal-bearing provinces in eastern and central India.

A number of sponge unit owners with plants in eastern and central provinces, such as West Bengal, Jharkhand and Chhattisgarh, said that their plants were currently securing coal through either open market purchases through e-auctions by CIL, or negotiated supply linkages with the coal producer.