Montek for duty-free coal, crude imports

Calls for aligning domestic, global coal prices.

Planning Commission Deputy Chairman Montek Singh Ahluwalia today criticised the pricing and linkage mechanism in the coal sector. Making a case for linking domestic coal prices with the international prices, he said the mechanism reeked of a 30-year-old system.

Alhuwalia favoured a zero Customs duty regime on imports of energy sources like coal and crude oil which were brought down to 5 per cent since the country should encourage imports. "It is better to use someone else's raw material, particularly, if it is scarce," he said.

He said all over the world people were aligning to international prices and the country could not afford to remain away from it if energy was being imported. The country imports close to 25 million tonnes of coal annually.

While Alhuwalia favoured import parity, Power Secretary R V Shahi, representing the prime user of coal, said pricing of coal should not be left to producers since there was hardly any competition in the domestic market.

Stating that the petroleum sector had opened up to private and foreign investments completely despite being a scare commodity, Alhuwalia said, "There was no economic rationale in extending it (private investment) to coal."

Coal Secretary PC Parakh also supported the proposal stating that the sector should be opened to private sector without restrictions of captive mining. Trade unions have been opposing opening of coal mining to private sector apprehending exploitation of workers and a possible threat to survival of public sector coal companies.

"These are not tenable grounds. There are adequate legislative provisions for safeguarding interest of workers and it is the responsibility of the government to ensure that rights of workers are protected by the industry, whether in private or public sector," he said.

Alhuwalia said coal prices should be linked with gross calorific value and not the current system of useful heat value. On this suggestion, Coal Secretary PC Parakh later told reporters that National Thermal Power Corporation, Coal India Ltd and Central Fuel Research Institute were conducting experiments to transfer current classification into new ones.