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Coal India board defies govt directive

Decides against lowering e-auction volumes on fear of revenue loss; to write to coal ministry soon


Days after Union Coal & Power Minister Piyush Goyal announced in Parliament that Coal India Ltd (CIL) would halve its e-auction sales to make more coal available to the fuel-starved power sector, the board of the public-sector miner on Tuesday decided against the move, fearing revenue loss.

This is a rare instance of a public-sector entity defying the directive of its nodal ministry. The government holds a 89.65 per cent stake in the company.

“We have discussed the matter in detail at the board level. The board is of the view that there should not be any cut in e-auction volumes,” said a senior CIL official.

The Coal India board has decided to send a note, expressing its view on the matter, to the coal ministry. “Revenue loss is, of course, the main concern. But the board thinks it will affect customers as well, as there are many who buy coal from e-auctions,” the official added.

CIL, the world’s largest coal producer, sells about seven per cent of its production through e-auctions. Smaller power companies and non-power users are the primary takers of the auctioned coal, as most power-generation companies do not bid aggressively due to the tariff caps.

The ministry has been trying to pursue CIL to cut its lucrative e-auctions to ensure increased supply to power plants. “Large amounts of coal are being sold through e-auction. This is not in public interest. Coal India’s primary duty is to supply to power plants,” Goyal had recently said in the Rajya Sabha. He announced CIL would cut its e-auctions by about half to 25 million tonnes (mt) in 2014-15 from 58 mt last year.

CIL sources indicated e-auction sales in the June quarter this year had increased about 30 per cent to 14.65 mt from 11.28 mt in the year-ago period.

Power projects in India are reeling under severe fuel scarcity. According Goyal’s briefing in Parliament, 22 coal-based power plants monitored by the Central Electricity Authority had stocks for less than four days as of July 29.

A senior CIL official, however, contradicted this. “Of the 22 power plants, there could be seven-eight for which the shortage is due to CIL’s inability to supply more. But most have huge dues. Now, coal is supplied only against advance payments. Unless the payment is made, CIL cannot go on supplying,” he said.

Source: Business Standard