Why subsidise pvt firms on imported coal: Coal India directors
The imported coal of comparable grade costs about Rs 5,500
The independent directors of Coal India Ltd CIL have warned that the public sector giant could end up with Rs 60,000 crore losses over the next 20 years if it goes through with a proposal to import 20 million tonnes of coal and sell it to private power producers at a steep discount.
The seven independent directors,four of who are former IAS officers,last month wrote a dissent note to the government and Coal Ministry saying CILs move amounts to virtually subsidising private sector power companies.
Due to differences within the board,the proposal is still pending approval,CIL Chairman and Managing Director Narsing Rao told The Indian Express.
While CIL sells power grade coal at about Rs 1,100 per tonne,the imported coal of comparable grade costs about Rs 5,500. To make imports viable,CIL plans to mix domestic and international coal and sell the consignment at a pooled price to power producers,mostly private firms. The pooled coal could be sold this year for about Rs 4,500 per tonne.
The losses are likely to be around Rs 3,000 crore every year,and spread over the next 20 years even at the current level of imports and sale price,the anticipated losses to CIL will come to nearly Rs 60,000 crore, the independent directors wrote in the note. We do not think it is in the best interests of CIL to go for the risky business of importing coal when it has hardly any experience.
The Maharatna was asked by the Centre to import coal,especially high-grade coking variety,to tide over the shortage in the country.
The Centre for Monitoring Indian Economy has estimated that coal imports could grow 28.3 per cent in 2012-13 to 127 million tonnes.
The independent directors have said CIL cannot suppress the price of imported coal without the approval of Parliament. Such a decision could seriously fall foul of the Comptroller and Auditor General or the Central Vigilance Commissioner,they have argued.
The plan to mix domestic and international coal,sources said,was proposed by the Central Electricity Authority CEA to keep coal prices soft and to allow power producers to produce electricity at a reasonable cost.
But the independent directors have argued that the CEA position amounted to misleading the coal company. This is a subsidy. We do not think giving huge subsidies to private power producers is justified and CIL is not competent to grant subsidy without a legislation to this effect. It would amount to transferring crores of public money to private hands without law, the dissent note said.
CIL has 17 directors and the seven independent directors include former IAS officers A K Rath,Sheela Bhide,R N Trivedi and Mohd Ansari,besides IIM-A Director S K Barua,former IRS officer Sachi Chaturvedi and chartered accountant Kamal Gupta.
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