Virtually rejecting the plea of the Planning Commission and the industry players to allow private captive miners to use excess of coal from their allocated quota, the Coal Ministry has move a proposal to bar such category of miners from raising production excess of the approved levels.

In all such cases, the new proposed policy states, the surplus coal would be sold to the state-run Coal India Limited (CIL) and its subsidiaries at a price lower than the production cost. The issue of Anil Ambani owned Reliance Power being allowed to divert excess coal from its allocated captive mines for the 4000 MW UMPP Sasan project in Madhya Pradesh had invited the ire of the Comptroller and Auditor General (CAG). This had prompted the empowered group of Ministers (EGoM) headed by Finance Minister, Pranab Mukherjee to refer to the matter to the Attorney General (AG) for legal opinion on the issue.

Both the Planning Commission and industry had pleaded that the excess production, other than the allocated quota, should be allowed to be used by the captive miners to ease the dry fuel shortage situation. The Cola Ministry has sent the matter for the opinion of the Law Ministry and thereafter it would formally launch the policy aimed at bringing about transparency and accountability in execution of projects pertaining to captive coal mines.

Interestingly, the Coal Ministry had put the proposal on its website on Tuesday but later withdrew it after it realised that matter had yet not been cleared by the Law Ministry. The Coal Mines Nationalisation Act of 1973 allows coal from captive block be used exclusively for specified end use project and production of surplus coal should not result in any undue advantage to captive block owner, the policy states. It said the surplus coal should be placed at the disposal of CIL which in turn would dispose it off through e-auction.

However, the private industry players have a different take on the issue. The Association of Power Producers Director General, Ashok Khurana is of the view that government should enable surplus coal to be disposed off in a manner provides incentives to coal producers. Some other players are of the view that by producing excess coal from captive mines Indian companies could have saved foreign exchange spent on importing coal. However, the Government is of the view that keeping in mind the poor track record of the industry on such issues, it was seriously concerned about the misuse of diversion of excess coal to other projects.

Coal Ministry officials pointed out that of the 193 coal blocks allotted over 18 years to companies for captive use, only 28 have managed to start production. Against a target of more than 90 million tonnes, only 38 million tonnes is being mined out from these mines. It is estimated that coal deficit in the country is likely to grow to 137 million tonnes by end of the fiscal. Due to domestic coal shortage and high cost of imported coal, power projects being commissioned after March 2009 are operating at sub-optimal capacity or are have still not come into production due to enhanced operating cost factor.

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