Instead of putting the de-allotted coal mines into production, Coal India would do well by setting up power plants at the mining sites

Working like a beaver, the Inter-Ministerial-Group (IMG), so far, has been able to recommend de-allocation of five coal mines, which the government has approved. So far, so good; but a lot more remains to be done as their slate is full.

Bank guarantees have been encashed for some, while Monnet Ispat & Energy has been asked to provide a bank guarantee for the Odisha coal block that was allotted in 1999. One wonders what were the authorities doing for the past decade or so, when no progress was made the site, any way?

Due to Mamata Banerjee's tantrums and pullout from the UPA government, making it a minority in power, the coal block issue went to the backburner. Or so it seemed, eclipsed also by the FDI issue.

The finance ministry suddenly woke up to realise the impact of the encashment of the bank guarantees and the exposure to the banks if they had no additional collaterals. The mining and quarrying sector has an estimated Rs36,000 crore in deployment of credit by banks, as per the Reserve Bank of India (RBI).

As many of the allottees’ cases are under scrutiny by the Central Bureau of Investigation (CBI), it appears the relevant files are also held up by it, resulting in the prospect of delaying the IMG work, under the leadership of Ms Zohra Chatterjee, additional secretary (coal).  Ms Chatterjee is also on the board of Neyveli Lignite Corporation.

In the meantime, Coal India (CIL) has its eyes set on the prospects of getting the de-allocated coal mines in its fold. This move will bring in additional sites as potential areas from where more coal can be mined, provided of course, all the state and ministry of environment and forests (MOEF) clearances are obtained, transport logistics worked out, but all these can happen several years from such allocation!

The diesel price increase by Rs5 per litre will hit CIL by an estimated Rs600 crore this financial year, unless the rate is revised downwards, but how much of it will be passed on to the customer remains to be seen.

As for as the de-allocated mines being given to CIL is concerned, there is no point being served by the coal ministry, simply by passing the mines without doing the homework of assessing the actual potential to generate the much-needed coal from these mines, and that too after getting quick clearances from all concerned.

For a mine to be fully operative, the time frame for production is a minimum of five to seven years from the date of such all clear signals. Hence the coal ministry would do well to think of some alternative plans rather than placing all the eggs in the CIL’s basket, which is overflowing with other eggs in incubation. Can the new allottee promise to deliver the goods by setting up a power plant at site, under bank guarantees?

(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)