Coal India may not be the custodian for surplus coal

The Planning Commission has worked out a coal banking mechanism that does not involve public sector miner Coal India.

A high-level panel headed by B.K. Chaturvedi, Member, Planning Commission, has finalised a proposal wherein two private companies could exchange surplus coal available with them. This means if a company starts mining coal from its captive mine before its end-use plant is ready, it can offer that fuel to a company whose end-use plant is ready but whose mine is not explored.

“This would have to be agreed commercially by both the companies after seeking approval from the Coal Ministry,” said a Government official.

However, several other issues such as pricing of the coal, volume and mode of inter-State transportation of the fuel needs to be discussed, he added.

Earlier, public sector miner Coal India Ltd had expressed reluctance for implementation of a mechanism wherein it receives coal from private miners and commits itself for returning it to them in the future. This forced the panel to look at alternative ways to use surplus coal available with the companies.

The Association of Power Producers (APP), that represents 20 private power producers in the country, had suggested that Coal India should be the custodian of surplus coal. They estimate nearly 25 million tonnes of extra coal to be produced by 2015-16.

According to the Coal Mines (Nationalisation) Act 1973 that oversees captive mining, all coal mined from the block must be used entirely for the respective end-use project.

The Chaturvedi committee report would be submitted to the Coal Ministry, which feels that excess coal, if any, should be given to Coal India or its subsidiary at a notified price.

“The coal banking mechanism can be implemented only after Cabinet gives its go-ahead,” clarified the official.

Reliance Power had received the Government’s approval to use excess coal from attached mines in Sasan Ultra Mega Power Project (UMMP) for another of its project.

In August 2008, an empowered Group of Ministers (eGoM) allowed Reliance Power to use excess coal from the Sasan Project for its Chitrangi project in Madhya Pradesh.

(This article was published on October 30, 2013)
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