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Government-industry meet to snip high CIL margins

Tuesday, 7 January 2014 - 11:54am IST | Place: Kolkata | Agency: DNA
Coal major to skip meeting scheduled for today that seeks to prevent the firm from charging 40% premium on tapering linkages.

In the first-of-its-kind meeting convened by the government, various ministries and industry bodies would deliberate today at New Delhi several issues regarding coal supplies, most of which will adversely impact Coal India Ltd’s (CIL) profitability.

Some of these are preventing CIL from charging a high 40% premium on tapering linkages, forcing cement plants to buy expensive coal and stopping traders from participating in e-auction of coal, documents circulated on Monday showed.

The first meeting of the central coordination committee would be chaired by the coal secretary and expected to be attended by ministries including power and steel, department of industrial policy and promotion (DIPP), department of economic affairs, representative of state governments, industry bodies like Assocham and Ficci.

But CIL, despite being at the centre of all the coal supply related issues, wouldn’t be sending anybody to the meeting, expressing its displeasure at the agenda points, sources said.

“Cement industry is suffering greatly because of the sub-standard quality of coal supplied to them after good quality of coal is seggregated and diverted for sale through e-auction,” DIPP said demanding that cement be re-classified as core sector by CIL.

It said that delays in setting up of washeries have “compelled coal consumers to import coking as well as non-coking coal”.

Extensive variation in the declared gross calorific value of coal supplies and actual quality received at the cement plants, and CIL’s practise of forcing them to take up to 25% of commitment in form of higher grades, which has no takers, have also been criticised by DIPP.

The power ministry, on its part, has demanded that CIL stop charging 40% premium over notified prices for tapering linkage holders having own coal blocks.

Coal India Ltd stake sale plan shelved
The government has shelved its ambitious plan to sell 5% stake in Coal India Ltd and is now instead focusing on raising money through special dividend from the coal miner. “Coal India issue will not happen,” a finance ministry official said. “It (raising money from Coal India) will be only through special dividends.” The government had planned to divest 5% stake in the company through offer for sale. However, the government has put the plan on the backburner because of persistent opposition from the trade unions, the official said. It is now exploing ways to force the near monopoly coal miner cough up Rs15,000-20,000 crore as dividend. Most of that money would flow into government coffers as it controls 90% of the equity of the company having an enviable cash balance of over Rs65,000 crore.

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