The Hindu Business Line : Coal merchants apprehensive of marketing through e-auction

Industry & Economy - Coal
Marketing - Online Marketing

Coal merchants apprehensive of marketing through e-auction — Call to continue system of linkages

Badal Sanyal

Kolkata , March 13

MARKETING of coal through the e-auction route may appear remunerative for state-owned coal companies but, in an era of coal shortage, there is the possibility that it will play havoc with the economics and sustainability of the existing coal-based industries, particularly in the non-core sector.

The Indian Coal Merchants' Association (ICMA) feels that the proposed system will attract only those with "deep pockets" and a lot of "muscle power" because huge quantities are involved initially which are then rationed among smaller consumers at higher prices.

Expressing concern over the new marketing initiative proposed by Coal India Ltd (CIL), the association has urged the recently constituted expert committee in the Union Coal Ministry to examine CIL's proposal in the right perspective so as to ensure uninterrupted operation of industries in the non-core sector, which employs millions of workers and provides an equally large number of indirect jobs.

The association has suggested to the Chairman of the committee, Mr T.S. Shankar, the continuation of the present system of linkages or the Maximum Permissible Quantities (MPQ) formula based on the quantity of coal actually drawn by a consumer during the last three years. It has been pointed out that the quantities to be made available for the non-core sector should be reserved between 7 to 10 per cent of CIL's total production.

The Chairman of ICMA, Mr V.K. Arora, admitted that there was black marketing of coal but the final destination of such coal was the unorganised brick kiln sector, located in the heartland of the country. If ways and means were found to give coal directly to the sector, the entire black marketing system would collapse, Mr Arora said .

The non-core sector, therefore, insists that the system of linkages or MPQs should not be done away with on the plea of checking black-marketing of coal. Accordingly, it suggests that CIL revise the price of coal rather than introduce e-auction, which would make coal available to the highest bidder in the non-core sector.The association has also pointed out that the Union Ministry of Coal habitually looked after the interests of consumers such as power houses. As far as the non-core sector was concerned, it was left to fend for itself and only after the coal requirements of the core sector was met.

Mr Arora also referred to the penal railway freight charges levied on consumers on account of overloading by coal companies. The penal charges, which were 2.2 times the real freight earlier, have now been increased to 13 times the normal freight. The association wanted the expert committee to ask the Ministry of Railways to reverse the recent directive on increase in penal freight charges. Alternatively, the coal companies should be held responsible for overloading and should be made to bear the charges.

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