Power firms to be allowed to retain excess coal in allotted mines: Official

NEW DELHI: Excess coal from blocks allotted to power companies should stay with them rather than being given to Coal India (CIL), a power ministry official has said.

"It (surplus) is power sector's coal, it should remain with the producers... the same way steel or cement producers' fuel should remain with them," official said.

In the draft guidelines for usage of excess coal, the Coal Ministry has said that the surplus should be made available to state-run Coal India.

The Power Ministry's view incidentally follows Empowered Group of Ministers' (EGoM) decision last week that the paved the way for Reliance Power to use the surplus from the coal mines awarded for the company's 4,000 MW ultra mega power project at Sasan in Madhya Pradesh for its another such plant in the state.

The power ministry official said that surplus fuel available after the primary usage (power generation) should remain with the developer, which would encourage more companies to enter into the sector.

"Our point is that if there is no reasonable return on investment, why will the companies come and invest in the sector," he said.

A private power developer incurs expenditure on excavation of coal required for power generation. If the surplus fuel is given to another company, then the power developer stands to lose a a portion of its original investment for developing the same mines.

The Coal Ministry's has said that the surplus coal should be given to CIL at notified price or cost of production, whichever is lower.

The draft policy on usage of surplus coal is first likely to be discussed in the Committee of Secretaries (CoS) meeting, headed by the Cabinet Secretary.

"After it's (CoS) approval the proposal would go to the Cabinet Committee on Economic Affairs (CCEA)," the official said.

The policy would cover the surplus coal available from all the coal mines allotted for all sectors.