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Should Coal India be allowed to carry on e-auctions?

Coal India need to honour the commitment given to power producers by supplying them coal first and only resort to e-auction of any excess production

The Cabinet Committee on Economic Affairs wants Coal India Ltd (CIL) to complete the 172 FSAs (fuel supply agreements) so as to cover the requirement to generate 78,000 MW capacity. Dutifully, in line with this directive, Coal India Ltd (CIL) has, so far, signed, 161 FSAs to reach 73,675 MW. Only 11 more to go and this will probably be completed over next four-six weeks.
 

In the last fiscal, CIL had e-auctioned 58 million tonnes of coal and recently, Power Minister Goyal had asked them to reduce this to 25 million tonnes for 2014-15, so as to enable power generators to get more coal. However, even before the Minister's order could reach CIL, they had offered 17 million tonnes in the open market.

This reduction in coal offered under the e-auction method has resulted in an indefinite call for a strike by agitated truck drivers. It is reported in the press that these 5,000 truckers belong to the Brajrajnagar Truck Owners Association.
 

As has been the practice, Coal India arranges for supplies by rail to those under the FSAs and all the coal sold under the e-auction category are moved by truckers. Now, the trucking community wants the restoration of their right to move the coal or share part of the rail moved-cargo.
 

At the moment, these 5,000 truckers move some 40,000 tonnes of coal daily to far flung places like Tamil Nadu, Andhra Pradesh, Maharashtra and to various sites of NTPC. Meanwhile, this agitation, according to the press, has already affected the movement of coal from mines in the IB valley, resulting in piling up of coal at the pitheads.

 Odisha, which accounts for 110 million tonnes of coal per year, supplies 25% of this to CIL but this disruption, due to inadequate rail connectivity is causing anxiety and loss of money. Many FSA signatories, in order to ensure supplies and to prevent disruption of their work, also depend upon e-auctions to maintain good inventory and continuity of production.

 In the meanwhile, press reports show that Babu Pradhan, BJD MLA from Talcher, who controls several unions in coal and allied sectors, has "warned" Coal India of a similar agitation in the Talcher coalfields. There is fear and apprehension that the sympathetic strike may spread to other areas and the striking workers may secure support from mines in the locality.

Coal India supplies coal to cover 60% of electricity generators in the country. Often, there are issues of short supply of railway support to move the cargo from pitheads. Besides, there are bureaucratic hurdles in opening new mines. It is well known that environmental clearances, land acquisitions and other related matters retard their progress.

In a recent conference, Minister Goyal is reported to have said: "I want to see a diesel generator and inverter free India within the term of our government". This is a great aspiration to reach. However, a lot needs to be done to achieve this.

Coal India, being a cash cow, with cash reserves of over Rs52,700 crore (as at 31 March 2014) has begun to seriously consider building up solar power projects in different locations, for a total combined capacity of 1,000 MW, which is estimated to require a minimum of 5,000 acres of land. At the moment, India's solar power capacity is only 2,800 MW and there are plans to achieve a total of 10,000 MW by 2017, according to renewable energy ministry.

Because of the continued uncertainty associated with coal supplies, most power generators, factories resort to imports, and participate in e-auctions, besides signing the FSAs. Organisations like NTPC, for example, have signed an accord with Andhra Pradesh for setting up a 1,000 MW solar power project, and it is likely that the state government will make available the required acreage to set up the project.

Finally, the question is: whether this e-auction should continue or not? In order to sanctify the FSAs, it is imperative that Coal India honours the commitment made by supplying the coal first and only resort to e-auction of any "excess" coal mined over the planned targets in given mines. In any case, the coal truckers’ threat to go on a strike reflects on the inability of railways to supply the wagons when needed. This needs to be corrected with active support of the railway ministry. Coal movement must be treated as an "essential service" and truckers cannot hold the country to ransom.
 

As for the threat by the MLA, Babu Pradhan, this needs to be handled by appropriate authorities. Such threats must be nipped in the bud.

Soure:Money Life