Coal India may blacklist five sectors

A high-powered committee set up by Coal India Limited (CIL) for studying coal supplies to small and medium sector consumer under the new coal sales policy has recommended restricted or no issue of new letter of assurances ( LoAs) to smokeless fuel, brick kiln, briquette, crockery and coke oven units.

This was on the basis of feedback received by the committee that bulk of the coal issued to these small and medium units, without being consumed, was mostly diverted to the grey markets at a high premia.

The diverted coal has been traced to the illegal coal markets of Varanasi mandi in Uttar Pradesh. In 2006-07, the small and medium consumers were fed with 2 million tonnes of coal.

A CIL official alleged, " We have definite feedbacks that most of the coal has been diverted to the Varanasi mandi at a high premia Hence the need to be alert on issuing LoAs to these units. We have to prioritise whether coal should be provided to a new cement unit or an upcoming or existing briquette unit".

It is on the basis of LoAs issued to these units that future Fuel Supply Agreements (FSAs) are usually done. CIL may stop issuing LoAs to these units, alleging most were ' unscrupulous'.

State sponsored agencies may work out FSAs on behalf of these units. Recent vigilance by the coal ministry resulted in the reduction of the number of CIL consumers through shedding of allegedly "unwanted and unscrupulous" customers.

In 2001-02 CIL had 4,800 customers but the number was now 700, with a further reduction imminent. Small and medium consumers would be worst hit, as they were allegedly diverting coal to the grey market.

A CIL official, also member of the high-powered committee, alleged, "We are yet to identify the amount of coal that is diverted country-wide into the grey markets but this time we are cautious on the issue of the LoAs".