Singareni Collieries chief opposes move to regulate coal prices

Having successfully achieved turnaround in the last two years, the Singareni Collieries Company limited (SCCL) is now gearing up to face the new challenges in the wake of proposed reduction in import duties on coal and huge gas find in the KG basin.

It is also actively addressing other issues related to coal pricing, increase in freight rates, enhancing productivity and internal efficiency.

Addressing a press conference here on Tuesday, RH Khwaja, the chairman and managing director, strongly opposed the move to regulatory mechanism for coal prices which were de-regulated in 2000.

He observed that the argument that coal prices were largely responsible for higher power tariff was a half truth as there were several factors like freight charges impacting the power tariff.

In the given scenario, any attempt to reduce or make uniform the coal rates all over the country would spell disaster for a company like SCCL which produces 40 per cent of coal through the high-cost operations in the underground mines, Khwaja said.

Pointing out that coal was the only product which did not enjoy any incentives or subsidies like petroleum and other fuels, he said adverse competition was imminent as the duty on coal imports was expected to be reduced from the present level of 33 per cent to 8-10 per cent.

While Coal India Limited registers about 86 per cent of coal production from open cast(OCP) mines, which actually form the profit-making operations, SCCL's share from the OCPs is only 60 per cent. This shows the vulnerability of SCCL should the import duty on coal be reduced, he opined.

Khwaja also clarified that though Singareni Collieries had achieved a major turnaround, it was still saddled with social responsibilities like providing for the rehabilitation of tribals and environmental protection measures on its own in the absence of monetary assistance from central or state governments for the last three years.

"Either central or state government should share the burden or a change should be effected in the present internal rate of return (IRR ) formula enabling the company to set aside funds for such purposes," he demanded.

Khwaja, however, ruled out the possibility of increasing the coal prices which had been hiked way back in the year 2001.

On the operational performance of SCCL, Khwaja informed that the company had already crossed the proportionate target for the three quarters end at 24.105 million tonnes, an increase of 0.51 per cent.

The company set an annual production target of 33.5 million tonnes, as against 33.24 million tonnes achieved in the year 2002-03.

The SCCL chairman said that the company would strive hard to improve the productivity levels and set a new record in the coming days.

"Besides several achievements to our credit, our major failure this year has been on the safety front with two disasters which claimed 27 lives."

The company proposes to open eight open cast mines with Rs 485 crore capital investment during the 10th plan period.

According to Khwaja, the new underground mines would require 3 to 5 years time to commence production, while open cost mines take a little less time.

Replying to a query, the Singareni Collieries CMD said that about 1,376 employees would be given VRS option this year. So far over 7,641 employees had availed of the VRS scheme in the company.

The scheme had been extended to only 60 categories out of around 500 categories of work , he added. The company employs around 94,000 work force.

Singareni Collieries is the only PSU in entire country sharing its profits with its employees from 1999-2000 onwards. Ten per cent of the company's profit, amounting to Rs 67.94 crore, was paid to workmen as special incentive during the last 3 years.

It has enhanced the special incentive to 11 per cent of its profits for the year 2002-03. Accordingly Rs 45.87 crore was disbursed as special incentive to employees in the first week of September, 2003.