Ten coal blocks under consideration for commercial mining by May 2016

Govt plans Uday-like scheme for stressed steel industry

To ensure supply of coal to the small-scale factories which doesn't have a fuel supply agreement with state-run Coal India, the Coal Ministry is considering allocating 8-10 blocks of the fossil fuel with state-run undertakings which will be able to sell coal to the coal deprived industry.

This scheme, which will follow the nomination route of block allocation to the public sector undertakings and enable commercial mining is likely to be rolled out in the coming two months.

"The state (undertakings) is free to decide on the pricing. If they seek our advise over it, we (union coal ministry) will help them, otherwise they can set their own pricing", coal secretary Anil Swarup said here today on the sidelines of an event organised by the Coal Consumers' Association of India.

 

The pricing mechanism and the basis, however, is not clear. Also, whether the state government will have a say over the price or the state owned companies can decide it is shrouded.

Under the present structure, Coal India does not sell coal to the small-scale industry and other sectors like brick-kilns and sponge iron plants (which also require coal as fuel). These companies procure coal from resellers at a usually higher price than notified by Coal India.

The sponge iron industry alone is estimated to consume around 30 million tonne (mt) of coal annually which far exceeds the total annual production capacity of some of Coal India's subsidiaries.

The move is likely to rationalise coal prices in this sector of the economy besides helping the state-run companies secure their own coal linkages.

The Odisha state government has already written to the coal ministry asking for allocation of the Patrapada coal block (in Odisha) which has 1,042 mt coal reserve to Odisha Mining Corporation (OMC) for commercial mining.

Besides, although the necessary groundwork to allow private commercial coal mining has been done, Swarup, expecting lukewarm response from the priavte sector, said it might not be the right time to allow it.

"Maybe, we have to create demand for it", he said.

While the coal ministry is keen to make an annual auction calendar for the carbon-rich mineral, it is likely to step up the quantity in forward auctions and reduce the coal availability in spot auctions.

Government may roll out Uday-like scheme to help the steel sector

The government is considering rolling out a scheme framed on the lines of Uday to heal the stressed steel sector in the country. "A package like Uday should be made for the steel industry. We cannot allow the Indian steel industry to die an unnatural and premature death", coal secretary Anil Swarup said.

Expressing his confidence that Uday will help revive the power sector by relieving the stress on discoms, he said a similar scheme for the steel sector will help address its problems.

According to a presentation by the Indian Steel Association to the government, as of September 2015, the sector accounted for 21% of the total number of corporate debt restructuring cases, of an aggregate of Rs 56,000 crore. The sector's share in total stressed accounts of scheduled commercial banks is 10-11%.