Coal ministry favours market-linked prices

The coal ministry on Wednesday favoured market-linked prices for coal but said no decision on increasing domestic coal prices has been taken.

"In principle, we agree to all the recommendations made by the Planning Commission including market-linked prices for coal. . .But, no decision on price increase has been taken yet," Coal Minister Sriprakash Jaiswal told reporters in New Delhi.

The Planning Commission had recently recommended leaving the coal prices to the market and allowing free trade of coal nationally and internationally. Although coal prices were deregulated in 2000, the rates are fixed by the coal PSUs under the guidance of the coal ministry.

The country's largest coal producer Coal India Ltd has been demanding a hike in coal prices on account of the wage revision of its employees. Jaiswal said, the "government is trying to develop a mechanism to reduce the burden on CIL on account of upward wage-revision of its employees."

CIL, which is targeting to produce 435 million tonnes of coal in the current fiscal, had an output of 154.6 million tonnes of coal during April-August 2009 as compared to 140 million tonnes in the corresponding period last year.

Moreover, Jaiswal said the ministry is working to sell up to 10 per cent of government's stake in CIL as of now and no fresh equity would be issued by the company.

Coal India plans to offer stock options to over four employees post-disinvestment.

Besides, it would offer shares to the displaced farmers as part of the compensation.

Further, the minister said as many as seven coal blocks out of 207 such reserves allotted for captive use had been cancelled in the past one month for failure on part of the allottees to develop and mine the respective blocks.

In the last fiscal, the captive mine allottees fell short of the targeted 37 million tonnes of coal production by 4 million tonnes. The government is in process of issuing showcause notices to the defaulting companies.

The minister, who headed a delegation to Australia recently, said talks were on with private coal producers there for possible tie-ups to augment coal production. Jaiswal said the six-point agenda unveiled by the ministry under the 100-days action plan had been achieved.

The agenda among others included formulation of guidelines for mine closure for coal companies, setting up of empowered committee of secretaries to facilitate CIL's investment abroad beyond Rs 1,000 crore (Rs 10 billion).

Also, guidelines for underground coal gasification projects mentioned in the six-point agenda was recently issued by the ministry, besides commissioning of the 125-MW unit of Barsingsar Mine-cum-Thermal Power Project of Neyveli Lignite in Rajasthan. Commercial production may start from the plant in a month's time, Jaiswal added.