Talks begin on disposal of surplus coal from captive mines

9 MAY, 2012, ET BUREAU
NEW DELHI: The government has begun consultations on disposal of surplus coal from captive mines amid differences among various ministries over the subject.

The process was initiated after the prime minister's office asked the coal ministry to withdraw a notified surplus coal policy and hold inter-ministerial consultations.

A senior government official said while coal ministry is against excess production of coal from mines allocated for specific end use, the power ministry has recommended encouraging miners with marginal incentives to boost coal production.

The law ministry had objected to the coal ministry's notified policy, saying it contravened with the stand taken by the government in the Sasan ultra mega power project (UMPP). The government had in 2008 allowed Reliance Power to use surplus coal from its Sasan captive mines in Madhya Pradesh for another project in the state.

An empowered group of ministers (EGoM) on UMPPs, headed by finance minister Pranab Mukherjee, had recently decided against reviewing the 2008 decision. On the recommendations of attorney general Goolam E Vahanvati, the EGoM asked the coal ministry to finalise a comprehensive surplus coal policy to avoid ambiguities in future.

"The coal ministry has moved a note seeking comments on a proposed policy for disposal of surplus coal," the official said. "The ministry has maintained that incentivising captive miners would amount to violation of amount commercialisation of coal mining that is prohibited under the Coal Mines Nationalisation Act."

The coal ministry wants to bar captive coal miners from producing more than the approved quantity. It has also proposed that excess production due to unforeseen circumstances be sold to Coal India at a price lower than the production cost and notified price for that grade. The policy is in contradiction to a Planning Commission proposal that seeks sale of excess production from captive coal blocks to Coal India at notified prices of equivalent grade.

As per the proposal mooted by the Planning Commission, threefourth revenue through sale of surplus coal would go to exchequer while mining companies can retain the rest as incentive for excess production.

The commission has argued that such commercial sale would help bridge the country's burgeoning coal deficit and reduce dependence on imports.