The Coal Ministry will move a Cabinet note shortly to finally put in place a policy on disposing surplus coal.

A three-member panel, headed by Planning Commission member B.K. Chaturvedi, has held the view that captive coal mining players should not be allowed to transfer surplus coal outside the end-use sector which they had been allocated for, and any surplus coal with them should be transferred to either the nearest Coal India Ltd. (CIL) subsidiary or other firms in the same sector facing shortage of coal in linkage coal from CIL.

Coal Ministry officials said they were still studying the report, and would consult various ministries before finalising the note for the consideration of the Cabinet Committee on Economic Affairs (CCEA).

There is also a view that the new policy will have to be notified after approval by the Cabinet through an amendment to the Coal Mines Nationalisation Act, 1973, and the existing 170-odd letters of allocation.

CIL reluctant on coal banking system

After CIL had expressed its reluctance to be a part of any coal-banking arrangement, the Planning Commission initiated discussions on the possibility of allowing private companies to transfer coal to each another.

The Power Ministry had conveyed to the committee as well as the Planning Commission that any coal banking system should not lead to profiteering among coal block holders. The government has allocated a total of 218 captive blocks to companies between 1993 and 2011.

Of these, 47 blocks have been de-allocated. Captive coal-mining companies were expected to produce 100 million tonnes by the end of the last five-year Plan period in March 2012.

However, production from captive coal mines has remained stagnant at 30-36 million tonnes over the past four years, giving rise to coal availability crisis. During the same period, CIL’s production has grown by 4.8 per cent to 452 million tonnes.

The coal banking proposal will allow companies to transfer coal to another company, where the end-use project has been commissioned before the coal block, and receive the coal at a later stage.

The government has already circulated the policy on surplus/incremental coal for the views from the ministries of finance, power, steel and railways as well as the Department of Industrial Policy and Promotion and the Law and Justice Department.

Besides, an opinion had also been sought from the Attorney General on the issue.


The article has been edited to incorporate the following correction:

A sentence in the Business page report, “Ministry to move Cabinet note on surplus coal” (Dec. 6, 2013), read: “Captive coal mining companies were expected to produce 100 tonnes by the end of the last five year Plan period in March 2012.” It should have been 100 million tonnes.

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