The Hindu Business Line : Coal Ministry to proceed with CIL's subsidiary plan

Ministry's view
Ministry of Finance has already raised objections to the plan
Coal Ministry favours setting up subsidiary because of procedural reasons
Subsidiary to enjoy more operational flexibility

New Delhi , June 12

The Ministry of Coal has decided to move ahead with the plan to allow Coal India Ltd(CIL) to set up a new subsidiary company Coal Videsh Ltd(CVL) for acquiring coal blocks abroad and is planning to place the proposal for Cabinet consideration next month.

This is despite objections raised by the Ministry of Finance, which has stated that CIL itself should do the acquisitions and there is no need to have a separate company.

Separate compay

"The Finance Ministry has said what they have to say. They can't scuttle our proposal. We would place the proposal before the Cabinet and let the Cabinet decide," Ministry sources said.

It further said, "It is a well thought out decision to have a separate company because CIL has very different priorities and would not be able to focus overseas. We had examined whether it could operate as a division of CIL, but it was decided that a new company would be required."

Final proposal

The Coal Ministry is now preparing a final proposal and plans to place it before the Cabinet Committee on Economic Affairs (CCEA) in July.

According to the plans, the new company would have a paid-up equity capital of Rs 1 lakh and an authorised capital of Rs 500 crore.

The official said that instead of setting up a new public sector company, the Ministry favours setting up the 10th subsidiary of Coal India mainly because of procedural and financial reasons. CIL already has eight coal producing subsidiaries and one planning and designing institute.

If a new public sector unit is to be set up under the Ministry of Coal, then the shares of that company would be held by the President of India and the procedures are lengthy but if set up as a CIL subsidiary the shares of the new company would be in the name of CIL and involves simple procedures, officials said.

CIL subsidiary

Also, as a CIL subsidiary the new company would be able to make use of CIL's financial muscle in the international arena, while as a new public sector unit it would have to depend on direct Government support, officials said, adding that this would also contribute towards operational flexibility.

Superior grades

Apart from acquiring coal blocks outside the country, Coal Videsh would also undertake import of superior grades of coal for the proposed coastal power plants in the southern and western parts of the country.

The company's proposed operations also include blending of imported coal with Indian coal to enhance quality.