Carve out new entity from CIL for coking coal: Plan panel group

Priyadarshi Siddhanta,priyadarshi siddhanta Posted: Jan 11, 2012 at 0159 hrs
New Delhi A high-level committee of the Planning Commission has held Coal India (CIL) responsible for failing to supply adequate coal to steel plants and has called for de-merging all unallocated coking coal blocks and carve out a new entity exclusively to meet the needs of the steel industry.

This unprecedented demand has come from the Working Group on the steel sector constituted by the Planning Commission for the 12th Plan period (2012-17).

The panel headed by steel secretary PK Misra has in its report to the Plan Panel argued that Indian steel makers are in a perennial problem because of acute paucity of coking coal, which has adversely hit their profit margins.

As on April 1, 2011, the country has total coking coal reserves of 33.47 billion tonnes of which 17.67 BT are proven reserves.

The steel industry met its production needs by importing 24.69 million tonnes during 2009-10. Beginning from a level of 17.877 MT in 2006-07, coking coal imports has been continuously on the rise, the Group pointed out. The estimated demand for coking coal in the terminal year of the 12th Plan (2016-17) is around 90MT.

As CIL has focused on producing thermal grade coal for meeting the needs of the power sector, the output of coking coal has virtually stagnated during the past few years, the panel said. CIL holds 90 per cent of the country’s coking coal reserves.

“The existing coking coal mines should be de-merged from CIL and a separate coking coal company should be formed,” the Group recommended. The proposed entity can continue to be run by the government to begin with and to remain fully responsible for developing coking coal mines. Any non-coking coal that is mined in the process can be offered to CIL at a reasonable price to be fixed by the government, it suggested.

As an alternative the government can consider offering coking coal assets to steel producers for development on tender basis to go to the highest bidders. “The steel companies getting such mines should also be allowed to sell the surplus coal mines in the open market. There are several virgin coking coal assets currently lying undeveloped with CIL and for which it does not have plan for development in the 12th Plan. These assets may be put on auction and the highest bidder may be allocated these blocks,” the Group suggested.

CIL has said that steel makers should ascertain their mining capabilities before having such aspirations.

CIL Chairman NC Jha opposed the proposal and said the two PSUs under the steel ministry — SAIL and Rashtriya Ispat Nigam Limited — were given one coking coal block each namely Tasra and Mahal nearly ten years ago and they have not been mined. “The Tasra and Mahal coal block have not been mined and understandably because these two PSUs do not have mining capabilities. So what will they do with new coal blocks? Moreover CIL’s subsidiary Bharat Coking Coal Limited (BCCL) has a negative worth of Rs 5,500 crore. If they want to be enthusiastic, then let them foot the money,” Jha told The Indian Express.