CIL opposes provision on returning coal on later date, prefers cash payment

According to proposed coal surplus policy, excess coal mined by private firms from their captive blocks would go to CIL

State-owned Coal India (CIL) has refused to accept the proposed future supply obligation in the coal surplus policy being formulated by the government.

The miner has suggested that it would rather prefer cash payment for the surplus coal it would procure from the captive mines of power and steel plants under the policy.

According to the proposed coal surplus policy, aimed at reducing the country's dependence on imported coal, excess coal mined by the private firms from their captive blocks would go to CIL.

It was indicated that there would be a “future-supply obligation” clause under which, CIL would have to return the coal to the entities from where it would procure at a later date as per requirement of the end-use plant. Thus, CIL would work as a “bank” for those entities.

However, CIL is opposed to such a provision, as it believes it may not be in a position to return the coal at a later date.

“CIL cannot guarantee that it would return the coal. Coal Ministry is in consultation with Plan Panel, which is working on the policy. It has been communicated from CIL that it cannot agree to such a provision, as it had to meet its own FSA (fuel supply agreement) commitment,” a senior official close to the development said.

“CIL instead is ready to make the cash-payment to the concerned plants for the coal it would procure from the captive mines,” the official added.

“The coal ministry is working on the policy. We have communicated whatever we had to say. I cannot share that. But surely, we want to ensure CIL's interest is not compromised,” CIL chairman and managing director S Narsing Rao recently told Business Standard , responding to a query on the matter.

The proposed policy on usage of surplus coal from the captive mines has been under consideration. This was mooted by the government as it was found that there were cases where captive captive mines were ready for production, but the end-use plant was not ready.

Coal Ministry had floated a draft Cabinet note over the matter in August inviting comments from concerned ministries.

The power ministry too has given an in-principle nod to the policy, which is under final stage of formulation by the Planning Commission and the Coal Ministry. The Planning Commission has recently said, it would come out by October this year.