As captive coal production dwindles, Centre mulls option to take back mines

PRATIM RANJAN BOSE ABHISHEK LAW SHOBHA ROY Kolkata | Updated on January 09, 2018

Coal Secretary Susheel Kumar   -  Debasish Bhaduri

Ministry has issued show cause notices to captive block awardees: Coal Secretary

Coal Secretary Susheel Kumar on Wednesday said the government is weighing measures to bring auctioned captive coal blocks into operation. The ministry has already issued show cause notices to companies that have failed to bring captive mines into operation.

Talking to BusinessLine on the sidelines of the 7th Asian Mining Congress here, Kumar said only 15 captive mines are operational now, nearly two years since the auction of blocks.

As per ministry records, 40 captive mines were operational in 2014-15, with the total production reaching 53 million tonnes (mt), when the Supreme Court scrapped a previous allotment procedure and de-allocated the mines.

In December 2012, the then Coal Secretary SK Srivastava had told media in a similar forum here that the government expected 100-mt coal production through the captive route in 2016-17.

While Kumar could not recollect the current captive production, a former Chairman of Coal India told BusinessLine that considering the trend in the first six months, the total captive production in 2017-18 should be 40-45 mt. This includes 15-mt captive production from Sasan Ultra Mega Power Project and Tata Steel.

‘Auction to be blamed’

Coal officials have little doubt that the government’s decision to create a hype over availability of fuel so as to make reverse auction successful, is to be blamed for this fiasco. “The government killed the captive coal mining sector. Those who invested are suffering,” said a former CIL Chairman.

He is not far from the truth. The de-allocation took place at a time when the economy was reeling under a perceived coal crisis, as huge coal-based capacities were lying idle for want of fuel. To add fuel to the fire, government officials asked the industry to participate in auction or face more uncertainty.

The government was keen to ensure the coal assets generated maximum value, and to make it transparent, they chose reverse auction as a tool.

The method was not incorrect. But companies took the perceived coal crisis seriously and went for highly aggressive bidding, so much so that they declared zero cost for operations and were ready to fill government coffers, too.

GMR won the Talabira-I block in Odisha at a negative bid of ₹478 a tonne. According to IHS Markit, Talbira-1 barely produced 0.18 mt of coal in April-September this year.

“The bidding went all wrong. Those who operationalised mines are keeping production at bare minimum to avoid any penal action,” said a coal official.

Kumar didn’t make any direct comment on the reverse auction fiasco, but he admitted the sector is ridden with problems.

“We are considering options,” he said, before adding: “We have already issued show cause notices to them (captive block awardees). If they fail to operationalise, we may have to take the assets back.”

Also read: CMD says Coal India yet to finalise diversification modalities

Published on November 08, 2017

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