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Aim to enable coal supply for SME units: Anil Swarup

The government on Wednesday cleared the allotment of coal blocks to PSUs for the sale of the fossil fuel mainly to medium, small and cottage industries and a policy for developing Underground Coal Gasification in coal and lignite areas. In an interview to CNBC-TV18, coal secretary Anil Swarup says the decision was taken as it was difficult for Coal India to supply to the small, medium and micro. "The focus of Coal India was obviously for larger units and smaller units were starved for coal and it is with that objective in mind that the coal sector has been opened," he adds. Below is the transcript of Anil Swarup's interview with CNBC-TV18's Nayantara Rai.

Q: Have you decide d how this coal can be priced? What are going to be the kind of rules that the state Public Sector Undertaking (PSU) or the central PSUs will have to adhere to?
 A: No, we have not introduced any pricing formula for selling of coal. The new initiative actually enables such state entities to - we have dispensed with the end use stipulation that was there earlier. You would recall in the past either allocation or auction of coal blocks there was this end use stipulation which prevented such entities which mined this coal from selling this coal to anybody else. They had to use the coal themselves for their own unit or their own entities. Now, when the coal block will be allocated to state or state entities they will be in a position not merely to use the coal for their own units but they would be in a position also to allocate or sell coal to other entities which includes private sector entities. The primary objective of this decision is to enable coal supply to small and medium (SME) sector units, even micro units because for Coal India to supply to these units was becoming increasingly difficult. The focus of Coal India was obviously for larger units and smaller units were starved for coal and it is with that objective in mind that the coal sector has been opened.

Q: Lot of people will read this decision like you correctly pointed out. Maybe Micro, Small and Medium Enterprises (MSME) weren't the focus area for Coal India but if I could ask you what could be the possible financial implication on Coal India since this monopoly on this is going to come to an end. Any kind of math that you have done what is going to be the financial implication, how do you think investors might also react to this and I ask you this because Coal India is a disinvestment candidate?
A: No, I don't think it will impact the finances of Coal India because there is such a huge demand in India for coal. If you recall last year we imported about 250 million tonnes of coal. So there is a huge gap between demand and supply within the country and we can't keep the small and medium sector starved of coal and they are also not in a position to import coal. So, in that sense they were either getting it from grey market or from somewhere else, all that will be eliminated. I don't think it will impact the finances of Coal India at all.

Q: When are you going to allow the private sector players to enter the fray?
A: We have moved in that direction. To begin with we have end use stipulation. Today the cabinet has taken a decision to remove that end use stipulation for the public sector entities and we are working out the details of commercial mining for private sector as well.

 Q: And by how soon can we expect that?
A: It may take a bit of time because there are certain aspects that are being examined but it will come soon.

source: http://www.moneycontrol.com