Power situation to worsen if all coal blocks since 1993 are cancelled: ASSOCHAM

The ongoing power crisis in several parts of the country in Punjab, West Bengal, Haryana and Uttar Pradesh will take a sure turn for the worse dealing a severe blow to the industrial production, if captive coal mining is stopped following the Supreme Court ruling holding all coal blocks between 1993-2009 illegal, the ASSOCHAM said.

Besides, in case coal blocks are de-allocated a huge amount of loans extended by the banks will become non-performing assets, the chamber said expressing concern over the situation arising out of the Supreme Court ruling.

It has created a fear psychosis in the coal consuming industries, such as steel, power, cement, aluminium etc. The stand of the Government of India that it does not have any objection to the coal blocks being de-allocated appears to have lost sight of the ground situation, the ASSOCHAM said.

It said if the captive coal mining is stopped today, substantial power generation in Punjab, West Bengal and Karnataka will come to a standstill and particularly these states will be plunged into darkness. Large segment of industrial activities will come to near standstill.

The chamber said the Government has made a statement in the Supreme Court on September 1,2014 to save 46 coal blocks which have either become operational or are on the verge of becoming operational. However, if reports that the Govt may not even press for this request are correct, it would be quite disturbing as lacs of persons are working in these coal blocks and end-use plans. Investment worth lacs of crores of rupees has been made in the End Use Plants / and coal blocks. These blocks must be saved in larger public interest.

The ASSOCHAM said while taking a pragmatic view in the wake of worsening power situation due to severe coal shortages, the coal blocks which are about to become operational shortly - say within 6 months- and where End Use projects have either been commissioned or are on the verge of commissioning shortly, should also be saved. It said the honourable Supreme Court may consider these points order only minimum coal blocks in the larger public interest, while surely delivering justice.

The ASSOCHAM said that many industries lost their coal linkage with Coal India Limited on the ground that they were allocated coal mining blocks. For covering the time required for operationalisation of the blocks the government gave them tapering linkages. In all fairness, after the blocks are de-allocated, their linkages have to be restored. But then this restoration will put immense burden on Coal India Limited, which in any case is struggling to meet even the current demand and is not able to improve its production, the chamber said.

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