PowerMin for safeguards in captive coal bankinghttps://indianexpress.com/article/news-archive/web/powermin-for-safeguards-in-captive-coal-banking/

PowerMin for safeguards in captive coal banking

The ministry has called for the setting up of an committee to decide on the transfer prices of surplus coal from one project to another.

The power ministry has told the Planning Commission that the proposed system of coal banking should not lead to profiteering among the coal block holders. The ministry has also called for the setting up of an empowered committee to decide on the transfer prices of surplus coal from one project to another.

The Commission is actively exploring the possibility of introducing the system of coal banking. A proposal to this effect was presented to the Plan panel by the Association of Power Producers (APP),a representative body of private power developers.

The APP proposal recommends that Coal India should act as a banker to store the surplus produce from at least 25 captive mines and return the fuel to the block holders once their projects go on stream.

Coal India,however,has refused to be a party to the proposed mechanism saying it cannot give assurances on returning the fuel given the growing demand for it.

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After Coal India’s refusal,the Commission has decided to allow cashless transfer of coal from one project to another for a maximum period of three years,and its equivalent return subsequently.

But the power ministry has cautioned that the block holder supplying coal should not unduly financially benefit from the banking process.

“There needs to be a balance between the need to appropriately incentivise surplus coal and the need to prevent undue enrichment. The transfer price of surplus coal should be decided by an empowered committee of the coal ministry,” the power ministry wrote in a letter to the Commission on November 18.

The BK Chaturvedi committee on coal banking has finalised its report and would likely submit it next week.

The power ministry argued that the captive block owners cannot be allowed to operate under this dispensation for a long period as it would defeat the basic objective of allocating a block for an end-use project.

The ministry also said that wherever a captive block renders surplus coal for longer period,the government must re-assess whether the allottee deserves the block or not. Even the transfer of coal from one project to another should be executed under well-defined government guidelines.

The ministry’s views come amid the coal ministry trying to seek the Union Cabinet’s approval for its Surplus Coal Policy which envisages that any surplus produce from the captive mines would have to go to Coal India at a government-determined price.

The power ministry too has argued in favour of surplus coal finding their way into Coal India,but the fuel should be reserved for use of the power sector only for the purpose of onward supply to the thermal power plants.

The ministry wants full disclosure on facts and figures of the coal block allottees who can potentially be in a position to bank surplus coal temporarily.

Vetting of the coal banking proposal is unlikely as the government is more inclined to opt for the surplus coal policy,which has been approved by concerned ministries and is in consonance with the existing guidelines of the coal ministry. “There would always be a lurking fear that few big firms may cartelise and control the coal banking system and dictate their firms,” a senior coal ministry said. He,however,did not elaborate further.

Fuel transfer

* The Planning Commission is actively exploring the possibility of introducing coal banking

* A proposal to this effect has been mooted by the APP

* Under this,Coal India could bank coal from captive mines of power plants under development and then return the fuel in kind at a later date

* Coal India has refused to give assurances on returning the fuel

* The Plan Panel has decided to allow cashless transfer of coal for a three-year period to be returned subsequently

* The power ministry feels that the objective of coal block allocation would be defeated if block operators are allowed this for long

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* The ministry has called for guidelines to govern this process