Environmental restrictions could pull down the internal resource mobilisation of Coal India (CIL) for the current financial year by 45 per cent. The state-owned coal producer alone meets 80 per cent of the country’s coal demand at around 500 million tonnes (mt) annually.
The company had last year budgeted for a three-fold jump in internal resources for 2010-11 by mobilising Rs 9,800 crore, compared with the revised estimate of Rs 3,100 crore for 2009-10.
CIL attributed the lower resource to restrictions put on projects on environmental grounds that hampered production. “We had set a target of producing 450.5 million tonnes (mt) of coal in 2010-11. But we had to reduce it by 20 mt because of several restrictions like Comprehensive Environment Pollution Index (CEPI) on projects,” said a senior CIL executive.
Coal meets over 55 per cent of India’s total primary energy requirement. According to numbers put out by the Union Budget, not only the Internal and Extra-Budgetary Resources (IEBR) number for 2009-10 was down to Rs 2,814 crore, the figure for 2010-11 is also estimated to be lower at Rs 5,418 crore. Former CIL chairman Partha S Bhattacharya had said last year that the increase in IEBR would be possible by a 30 per cent increase in margins owing to increased productivity.
The environment ministry’s controversial CEPI guidelines categorise the environmental quality of industrial clusters. Seven producing coalfields – Chandrapur, Korba, Dhanbad, Talcher, Singrauli, Asansol and Ib Valley – fell under the CEPI moratorium.
“The restriction of CEPI came in March 2010, much after we had planned for the budget. We have not been able to produce from the projects covered by CEPI,” said the CIL executive. Fourteen projects of Coal India have been affected by CEPI restriction.
The guidelines, along with the No-Go areas restrictions, have forced a downward revision of Coal India’s 2012 production target from the initial 520 mt to 447 mt. The adverse impact of the delay in projects is likely to affect operations in 2011-12.
The company is budgeting for a 22 per cent reduction in internal resources during 2011-12 at Rs 4,200 crore over the revised estimate of Rs 5,400 crore for the current financial year.
The Coal India official, however, clarified that the budget estimate figure for 2011-12 does not take into account the expected additional resource mobilisation on account of price hike announced by the company on Monday. “The budget figures were prepared much before we had planned the price hike.”
The Kolkata-based company had said in a filing to the Bombay Stock Exchange (BSE) yesterday that the price rise, effective February 28, will boost revenue by Rs 650 crore in the current financial year and by Rs 6,200 crore during the next ending March 2012.
The company’s share price at the BSE on Tuesday closed at Rs 338.4, up 3.1 per cent as compared to the previous day’s close. A 12-member Group of Ministers (GoM) is currently discussing the issue. Environment Minister Jairam Ramesh had said he hoped the CEPI moratorium would be lifted by March 2011 after the first meeting of the GoM.
