The Hindu Business Line : Coal India ready to buy from captive mine owners

AS a part of its emergency action plan to improve availability of domestic coal, the Union Ministry of Coal is preparing a mechanism under which owners of virgin coal blocks will be allowed to sell coal to Coal India Ltd (CIL) at a price to be determined by an empowered authority of the Ministry.

A total of 46 virgin blocks, with a total reserve of 5 billion tonnes of coal, have so far been allocated for development for captive consumption purposes. Incidentally, all the blocks, except four, have remained untapped.

As non-development of such blocks means loss of additional production, the Ministry feels that a mechanism has to be in place for encouraging the block owners to develop captive coal mines.

Indicating this, the Chairman of CIL, Mr Shashi Kumar, told newspersons here that, though reluctantly, CIL was ready to buy coal from captive coal mine owners and sell it to its own consumer.

Supply-demand gap: The total demand of coal as envisaged by the Planning Commission at the beginning of the Tenth Plan was about 460 million tonnes in 2006-07 and 620 mt in 2011-12, while the demand-supply gap was estimated at 55 mt in 2006-07 and 95 mt in 2011-12.

Mr Kumar said that CIL was making all-out efforts to augment its production so as to minimise the gap between indigenous availability and demand. He was confident that the country might not need to import coal, other than coking and low ash non-cocking coal, by 2025.

He said that CIL had recast its production target for the current year from the original level of 314 mt to 331 mt, and the target for 2005-06 has been fixed at about 351 mt. Total dispatch of coal in the first three quarters of the current fiscal had been about 235 mt against the annual plan target of about 228 mt. Compared to the dispatch during the same period previous year, CIL supplied over 15 mt more, registering a growth of 6.9 per cent.

During the last three quarters of the current year, CIL had registered a profit of about Rs 4,434 crore (provisional) against the budgeted profit of about Rs 2,044 crore. The profit made is about Rs 1,678 crore more than the Rs 2,755 crore earned during the same period last year, registering a growth of 61 per cent.

Incidentally, CIL earned its highest-ever gross profit of about Rs 5,955 crore in 2003-04. After paying corporate tax of about 1,859 crore, it retained a net profit of about Rs 3,030 crore.

Mr Kumar said that with increasing industrialisation and an increase in the price of oil & gas and also coal in the international market as well as an increase in the plant load factor of thermal power plants, the demand of indigenous coal had further increased.

Moreover, captive blocks had not added to production adequately. Of the 136 blocks identified, 46 were allotted to power, cement and steel industries. Only four blocks could be brought under production with only 8 mt in 2003-04.

CIL has made big plans to meet the revised production targets. A total of 99 projects have been planned to be approved by 2006-07 with a total capital investment of about Rs 20,988 crore, to create an additional production capacity of about 251 mt per annum.

Altogether 64 projects will contribute to production of about 87 mt in 2006-07, while the balance will begin contributing in the Eleventh Plan.

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