The unprecedented jump in imports of coal, coke and briquettes to 26.6 million tonne last year, from 14.41 million tonne the year before, coincides with growing stockpiles at pitheads and power stations. The bulk coal importers are traditionally steel plants, but coking coal imports have not grown.

The growth in imports comes from other grades of coal, consumed primarily by power stations, suggesting that coastal power plants have been buying their raw material abroad. The progressive cutback in customs duties from 85 per cent in 1994-95 to 10 per cent last year, makes imported coal cheaper around the ports.

"If you take the cost of coal at the opencast mines, our coal is the cheapest in the world," said Union minister ofstate for coal Dilip Ray. "It is the cost of transporting coal, like railway freight, that is killing us," he said.

And he has statistics to prove his point. The cost of mining coal at Eastern Coalfields (a producer prime grades of the mineral) is Rs 165.05 per million kilo calories, which is 11 paise cheaper than the costing of mining similar grades in Indonesia.

Mahanadi Coalfields in Orissa is able to operate opencast mines at a cost of Rs 94.75 per million kilo calories. Yet, the ultimate cost of the Indonesian coal at Chennai port is Rs 286.23 per million KCal, compared to Rs 332.13 per million KCal of coal mined at Mahanadi Coalfields.

Coal from Eastern Coalfields would cost thermal power plants Rs 381.43 per million KCal at Chennai. The difference in cost is partly because of domestic levies like excise and sales tax, but primarily because of freight charges and other transportation costs.

Despite the progressive slash, import duties increase the cost of Indonesian coal by Rs 33.31 per millionKCal, compared to Rs 17.70 per million KCal of domestic levies on the Mahanadi coal. Eastern Coalfields in West Bengal, has to pay taxes to the tune of Rs 82.76 per million KCal of coal.

The dramatic difference in costs comes from transportation charges. Imported coal can be carted to power plants at a cost of Rs 87.76 per million KCal, but coal from Orissa will entail a freight of Rs 219.68 per million KCal.If the east coast power plant is linked to Eastern Coalfields, the carrying costs will work out to Rs 133.62 per million KCal. Power stations importing South African coal on the west coast, have a similar advantage over those buying the raw material from South Eastern Coalfields Limited (SECL) in Madhya Pradesh.

The standing committee on energy, in its 17th report submitted to Parliament recently, notes that "our coal industry (was) not prepared to meet the challenges posed by imported coal." The panel said, "Indian coal is almost out of competition in the eastern coast and is very near to gettingout-priced in the western region also."

The stiff competition from imports comes at a time when the public sector enterprises can no longer draw comfort from a retention price. The phased decontrol of coal prices since 1996 has, so far, had industry money bins tinkling.

Coal India's profit before tax jumped, first by 80 per cent, from Rs 611.44 crore in 1995-96 to Rs 1,137.42 crore in the following year and then last year, by another 40 per cent to Rs 1,600 crore. Industry sources say coal companies had already mopped up all the "premium" they could get from the market and industrial recession would not allow any further hikes in coal prices.

The piling inventory at pitheads and power stations, that consume 70 per cent of the black mineral produced in the country, has, at this juncture, begun to shake the confidence of Coal India subsidiaries. Power plants have 23 days' stocks at present, compared to the usual seven days' inventory.Coal India and Singareni Collieries Company Limited (SCCL) mines have acumulative pithead stock of 25 million tonne, which is almost the same quantity that the country imported last year.