After SC's ruling on mineral rights, CIL stares at 'hard hit' in Odisha

State-owned mining giant, Coal India, is hoping to recover around 75-80 per cent of its liabilities from customers with whom it has long-term fuel supply agreements (FSAs) after the Supreme Court (SC) allowed states to recover dues retrospectively.

A legal recourse, however, is underway.

“We are impacted in two states – Jharkhand and Odisha.

"In Odisha, there will be a hard hit of Rs 35,000 crore.

"In Jharkhand, the impact was Rs 350-400 crore, which is not a significant amount,” P M Prasad, chairman and managing director, Coal India, said.

About 75-80 per cent of the coal has been given to big plants with whom Coal India has FSAs.

“If I can get 80 per cent reimbursed the impact will be around Rs 6,500-7,000 crore provided I can get it back,” Prasad said, on the sidelines of an interaction organised by the Bharat Chamber of Commerce.

He was explaining the impact of a recent Supreme Court ruling, which upheld the right of states to levy taxes on mineral rights and mineral-bearing land, and said that arrears were payable from April 2005.

The demand for the past dues will, however, be staggered in instalments over 12 years starting from April 2026.

Odisha introduced the Orissa Rural Infrastructure and Socio-Economic Development Act with effect from February 1, 2005, levying tax on the mineral bearing land.

Prasad said that in 2005, the company had gone to court. However, in four months it had given the amount under protest.

After the state lost the case in the high court, it gave back the money and Coal India in turn returned it to FSA customers.

However, while 75-80 per cent customers were big and operating plants, Prasad was not sure about being able to collect it from the balance 20 per cent.

“The FSA customers are big plants – they are existing, no one closed.

"But the remaining 20 per cent is through e-auctions or road dispatches which go to small players where collection is difficult,” he opined.

While Coal India has worked out the impact, Prasad pointed out that the matter was still sub-judice.

He said that a three-member Bench will be hearing the review in the Supreme Court.

Coal India has seven coal-producing companies.

The impact of the SC ruling on five coal-producing companies was zero, Prasad said.

On price revision, Prasad said, “If we revise, then it will impact the consumer once again.”