The exchequer would have suffered a loss, irrespective of coal being mined or not out of “Mother Earth”. It has incurred a real loss against the notional Rs 1.86 lakh crore estimated by government auditor. Here’s how:
According to Electrosteel Castings, the company that operates the lone producing mine out of the 57 blocks identified by the Comptroller and Auditor General of India (CAG), it had already mined out a significant amount of coal. “Parbatpur Coal Block has started production and so far mined almost 110,000 tonnes,” the company said in an email response to Business Standard.
If this extracted coal is valued at the landed cost of imported coal—Rs 2,874 per tonne—the loss to the exchequer would have been Rs 31.61 crore. If the same is valued at the cost of coal from e-auctions, which amounted to Rs 1,782 per tonne on the basis of Coal India data for 2010-11, the losses would be Rs 19.60 crore.
However, the government auditor has taken a conservative view in estimating the losses on these allocations on the basis of the difference between the cost of production (including financing costs) and selling price of Coal India, which translates into a gain of Rs 295.41 per tonne.
At this price, the actual loss to the exchequer on the coal so far extracted from Parbatpur mines by Electrosteel comes to Rs 3.24 crore.
According to the company,the Parbatpur Coal block is linked for production of 580,000 tonnes pig iron per annum. “The pig iron project is fully functional.” Parbatpur has total extractable reserves of 5.72 mt, according to the CAG report. If the entire coal is mined, then the loss for the exchequer would be Rs 169 crore, according to a conservative estimate. If the same is estimated on the basis of imported coal price, the losses swell to Rs 1,643 crore.
The company also has a second block allocated at the North Dhadhu.
This block is linked for production of 1 mt per annum sponge iron and 180 Mw captive power plant.
It is delayed due to delays in environmental clearances, the company said.
“The ministry of coal has allocated the coal blocks to Electrosteel after due consideration of the size of the projects, for which application has been made,” it added.
