Coal news and updates

Coal linkage auction option baffles Chhattisgarh SMEs

The small and medium enterprises (SMEs) in mineral-rich Chhattisgarh are in a state of shock with the coal ministry exploring the option of granting coal linkage on auction basis.

Coal secretary Anil Swaroop has been talking about giving coal linkage to industries on basis of auction. The move was aimed at bringing greater transparency in the process of giving coal to the units on linkage model.

SMEs, mostly the sponge iron units, have been procuring coal on linkage basis from the South Eastern Coalfields Limited (SECL) - the largest coal producing company in the country, having major coalfields in Chhattisgarh. Industrialists have also been purchasing coal from open market. But, the linkage method was the sole sources of getting coal for the local units. "Now when the coal ministry is looking to auction even the coal linkage process, the small and medium industries in Chhattisgarh will have a tough time ahead," former president of Urla Industrial Association, G K Agrawal, said. The process would plunge the sponge iron units in the state on the verge of closure, he added. The steel industry has already been reeling under severe crises.

The fresh process of the coal supply has in fact baffled small units. Big coal blocks have been bagged by the big players in the industry. Agrawal explained, that since the auction price was very high, small units failed to get coal blocks. Even if they bagged coal blocks at higher price, it would not be viable to run the unit.

What perplexed SMEs was the possibility of big players influencing the process of coal linkage also. Big corporates would bag the linkage at higher price and small units would be left in lurch.

source: http://www.business-standard.com