Comments
The Coal Ministry is of the view that Coal India should pay only the production cost while buying surplus fuel from captive coal mine owners.
The Planning Commission had in its draft policy on surplus coal usage said that companies can sell the excess output at Coal India’s notified prices. But the Coal Ministry has said, since Coal India’s pricing grades, based on gross calorific value, include margins, there is no reason why the Government-owned monopoly miner should pay those rates to the private mine owners.
The Coal Ministry is holding discussions with the Ministries concerned as well as the Planning Commission on the draft report, in which pricing is expected to be a sticky issue.
“The issue may not go to the Cabinet. We will take a decision after inter-Ministerial consultations,” a senior Coal Ministry official told Business Line .
In fact, Pratik Prakashbapu Patil, Minister of State for Coal, had recently informed the Rajya Sabha that surplus coal will be sold at a transfer price to be determined by the Government.
The proposed pricing mechanism means captive producers will have less incentive to produce more, and comes at a time whensurplus coal policy is taking final shape. The Coal Ministry stance has been that, if there is any surplus coal from a captive mine, it will have to be necessarily given to Coal India or any of its subsidiaries that are nearest to the private mine. Industry watchers attribute the move to fears of Coal India losing its monopoly status. If captive mine owners are allowed to sell directly to other steel, cement or power projects, there will be more supply, leading to lesser dependence on the public sector miner.
According to the Coal Mines (Nationalisation) Act (1973), of which captive mining forms a part, all coal mined from the block must be used entirely for the respective end-use project. And, the policy on surplus coal is basically aimed at determining the mandate for the use of excess coal from captive mines.
In limbo The surplus coal policy has been in limbo for the past few years, and earlier this year, the Cabinet Secretariat had advised the Coal Ministry to start the process afresh. Several private companies too had sought the Government’s permission to use the excess coal for other projects. But only Reliance Power’s plea, for using surplus coal from its captive mines in the Sasan Ultra Mega Power Project for its power project in Chitrangi (Madhya Pradesh) , has been approved.
An Empowered Group of Ministers (eGoM) approved the request in August 2008, and when the the issue came up again in April 2012, another eGoM upheld the earlier decision .
The Comptroller and Auditor General of India (CAG), however, had in one of its reports questioned the special treatment given to Reliance Power.
According to industry estimates, if the surplus coal policy is implemented, it can facilitate additional supply of at least 25 million tonnes by 2017. By this time, India’s total coal demand would be around 980 million tonnes. Of this, about 795 million tonnes would be produced indigenously, with Coal India expected to contribute about 615 million tonnes. This leaves a shortfall of nearly 180 million tonnes.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.