The Hindu Business Line : Paper makers against taking industry out of core sector

ANY move on the part of the Union Coal Ministry to take the paper industry out of the core sector for the purpose of allocation of coal linkages will have an adverse effect on domestic paper mills, feels the Indian Paper Manufacturers Association (IPMA).

The Association has urged the Union Coal Minister, Dr Dasari Narayan Rao, to refrain from approving such a proposal from Coal India Ltd (CIL).

Paper manufacturing plants had been encouraged by the Government to set up their own captive power plants as adequate grid power was not available, and they had done so at huge investments. In recognition of the paper industry's contribution to the economy, the Union Government had categorised it as falling under the core sector for supply of coal from the government collieries, on a par with sectors such as power, defence, railways, fertiliser, steel, cement and aluminium.

Despite all this, the collieries had resorted to cuts in allocation of coal, said the IPMA President, Mr. R.R. Vederah. The Railways had relegated the paper industry into anon-core sector consumer. He said the records of CIL showed that the supply of coal to paper mills had been inadequate and rail movement erratic vis-à-vis coal allocation to paper units during 2003-04. The CIL had despatched only about two million tonnes of coal against a targeted despatch of 2.7 million tonnes to 58 consumers in the paper sector.

Any move to take the paper industry out of the core sector would also force domestic paper mills to pay the market price for coal, which could be 15 to 20 per cent higher that the basic price at which CIL and its subsidiaries were currently selling to the paper industry.

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