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Coal India’s plans: A radical proposal!

Since Coal India has some blocks that are in the final stage of clearance, why not a decision be taken to set up a power plant at the mining site? Such a plant would be able to eliminate the transport logistics, ensure continuous supply of coal and it would be able to make the cheapest power in the country
Coal India (CIL) chairman Narasing Rao’s exclusive interview in a business newspaper made interesting reading on Wednesday. This dynamic chairman has called for the government to identify India's coal reserves as “sovereign property”, perhaps in line with other natural resources such as oil, gas, thorium, etc. And rightly so.
We must admire him for his courage and humility in accepting that the private entrepreneur is better endowed with freedom and resources to tackle issues as compared to government servants, whose stake, unfortunately, is restricted to pay cheques and retirement benefits!
He refrained from commenting on the methodology followed for the coal block allotments made, but freely admitted that some of the blocks given to Coal India in this manner were taken back, due to lack of activity. CIL was not spared, because it was a government sponsored company.
He supported the view that private firms were of immense help in the coal production process, whether was in terms of overburden removal or in taking the responsibility as mine contractors.

Narasing Rao has indicated that CIL was in the process of identifying some 15-16 coal blocks and hopes to develop these in partnership with private contractors. He estimates that this move is likely to enhance the coal production by 60-70 million tonnes by the Fifth Plan period.
It is well-known that the coal industry has too many hurdles to cross, principally from state governments besides the ministry of environment and forests (MOEF). Issues like land acquisition, rehabilitation and resettlement, forest clearance, etc have a vital role before permission can be obtained for commencement of work. He had stated earlier, in yet another press meet, that as many as 45 applications were in final process with MOEF, out a total of some 158, work on many of which would start, in right earnest, when clearance is given.
During the current Five Year Plan, CIL would be incurring a capex of Rs26,000 crore in order to expand coal mining operations. It would appear that this is in addition to the Rs7,500 crore earmarked for the railway infrastructure work planned, because transport logistics has been playing havoc with the movement of coal from pitheads.
Many of the power plants that heavily depend on CIL supplies are always short of coal and have less than 15 days inventory which has been mandated. Work on the dedicated rail corridors is chugging along in the same speed and manner of goods train, much to the chagrin of power plants.
With the Inter-Ministerial Group deeply involved in sorting out the issues with 58 out-of-turn allottees and going into the details of the progress they have made, before deciding if the work on the allotted coal blocks has been unsatisfactory to withdraw the benefit, CIL, also a victim, is at cross roads, bearing heavy responsibility as the premier supplier of coal to the country. What should it do?
While the issue of increasing or maintaining the private partnership with the industry is well taken, it is time for CIL and its board to think out of the box. It may be recalled that the board had marathon sessions to decide the FSA (fuel supply agreement) issue; this was followed by the question of uniform price, based on imported coal, with a number of units opposing such a move. These issues have to be still sorted out, when the Coalgate brought everything else to a halt!
Now, here is a radical proposal that the board of Coal India might like to consider seriously.   Since it has some coal blocks that are in the final stage of clearance, why not a decision be taken to study a proposal to set up a power plant at site, by spinning off to a Coal India Power?  Such a plant would be able to eliminate the transport logistics as a start; continuous supply of coal would be guaranteed; work could start for a connection to the power grid, and it would be able to make the cheapest power in the country. All the indigenous suppliers of equipments would be happy to ensure that their components are delivered on time, and considering the usual time frame in starting the mining operation, such an establishment of the power plant at the mining site would be a boon to the country.
Surely, Narasing Rao can accept such a challenge as he has the experience, knowledge and capability to deliver the goods!

(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].)



anantha ramdas

5 years ago

Thank you for your comments, Mr Karthi. It is really upto the Board of Coal India to pick the most suitable mine for this purpose, in terms reserves, thermal quality of coal, prospects for obtaining a reasonably quick state government clearance, and compliance of other required formalities of MOEF, and then, of course, obtain GOI permission to set up a new spin off company.

This move will also reward the shareholders.

Most importantly, as Narasing Rao had claimed, the benefit of such a new venture will go the people of India, to whom this natural national wealth belongs.


5 years ago

It is very good proposal and reduce pollution reduce the utilisation of transport and by all ways it will be cheaper. We need to understand the extent of reserves in these mines and based on that it can be decided. We should appreciate Mr. Narasingh rao's opinion on this. Good thought in the correct perspective. Why to give free fuel to certain companies and get power from them at a higher price?

Equity mutual funds suffer massive net outflow of Rs2,286 crore

This is the second time in the calendar year that equity schemes have suffered a net outflow of more than Rs2,000 crore

August was a terrible month for the mutual fund industry. Equity funds suffered massive redemptions amounting to Rs5,671 crore and with sales of just Rs3,385 crore, the net outflow of as high as Rs2,286 crore. This has been the highest outflow since February 2012 which saw an exodus of Rs2,809 crore.

In August the Nifty rallied by 3% from 5,241 to 5,421 before finally closing marginally higher at 5,259 while equity assets under management fell by 1.19% during this period. There were no new equity schemes launched during the period. However, an overseas scheme, DSP BlackRock US Flexible Equity Fund, raked in Rs26 crore. The net sales of equity schemes were marginally higher compared with the previous month, but it was still 42% lower than the total sales for the same month the previous year.

The total redemptions from equity schemes have been slowly increasing over the last four months and with no growth in sales we have seen a net outflow in the last three months. For the first eight months of 2012 we have seen a total net outflow of as much as Rs6,834 crore. In the first eight months of the 2011 we saw a total net inflow of Rs5,591 crore.

Net outflows will not reverse easily, especially now that the Securities and Exchange Board of India (SEBI) has announced a new set of norms which created a lot of flutter among both distributors and investors. As we have reported in various articles in the past month, in the proposed changes the investor is sidelined whereas the fund houses would benefit from the new cost structure and independent financial advisors were totally left out.

Check Out:
SEBI’s mutual fund rules changes are patently anti-investor
Much-maligned entry load was a cheaper option!
Regulation: Not for mutual benefit
SEBI announces reforms in IPO, mutual fund rules; leaves investors cold





5 years ago

. . . As Mark Twain said “A man who carries a cat by the tail learns something he can learn in no other way”.

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