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PRESS TRUST OF INDIA
New Delhi: The coal industry plumbed the depths during 1998 in the wake of receding demand and poor profitability even as difference of views between various government departments further delayed its long-awaited privatisation.
Attempts by the government to increase the demand fell flat as most state electricity boards (SEBs) downsized their coal off-take as stocks at power stations reached a record level during the year.
The future for the coal companies also came under pressure as some of the proposed power plants slated to come up in the Ninth Plan became a distant dream for policy planners.
Compared to initial estimates of 18,651 MW of additional power planned for the year, only 11,838 MW looks likely, which means a 38 per cent fall in the Ninth Plan target, as per government estimates.
Even the government came on record that financial performance of the largest coal public sector undertaking Coal India Ltd (CIL) and its subsidiaries might be affected in 1998-99 due to poor off-take of coal bypower stations.
In addition to this, state owned coal companies were also affected as the dues from the SEBs kept mounting to well beyond Rs 5,000 crore during the year, to recover these government has begun an exercise to securitise the dues with financial institutions. With the financial pressure, Eastern Coal Fields (ECL), a subsidiary of CIL, came out with a turnaround strategy by closing down 32 loss making mines at a time when financial institution ICICI was busy preparing its revival package.
However, the plan could not work out as West Bengal chief minister Jyoti Basu resisted the closure, obviously on grounds of job losses.
It was disappointing that ECL was on the verge of being declared sick, just after three years,with parent company CIL bailing it out as ECL reported losses of Rs 550 crore in 1997-98.
In order to make the domestic prices more competetive, the government imposed an anti-dumping duty of Rs 1,800 per tonne on imported metcoke. However, they need not have worried asinventories of coal at power stations mounted alarmingly and reached a record 17 million tonnes (MT) representing 25 days of consumption. The lifting of coal was also down by one MT by July end as the pressure kept on mounting on excess supply for the entire fiscal.
The coal ministry had set a total production target of 307 MT of coal while the demand is currently estimated at around 296 MT during the year.
In order to overcome this situation, the government came out with short term measures to solve the liquidity problem faced by coal companies and reduce piling inventory of coal.
The government contemplated open market sales through two schemes called open sales scheme (OSS) and local sale scheme (LSS) besides opening dumps in different parts of the country.
To what extent this has been effective would be known only by the end of the financial year.
Meanwhile, privatisation of the coal sector was again delayed as the coal ministry and planning commission differed on the future demand-supplysituation.
According to coal ministry estimates, there would be a surplus in coal production by 10 million tonnes by the year 2001-02, while the planning commission on the contrary expected a 35 MT shortfall in coal availability.
Coal ministry estimates were based on the huge pile-up of stocks with coal companies and various independent power projects not coming on schedule which had fuel supply agreement for using coal as fuel.
In order to weed out the fickle independent power producers from the serious one the ministry cancelled fuel supply agreement of six players and sent notices to others to know their interest.
These measures were taken by the ministry in order to have a clear picture of the demand supply situation.
The long pending demand of providing fiscal incentives to the coal sector in comparison to those for the infrastructure sector was also delayed as finance and coal ministries were at loggerheads on the issue.
Peeved by the lack of direction, coal and lignite companies felt theneed for an apex body to liaise with government and set up the Indian Coal Forum to chalk out ways to meet demand growth and marshalling investible funds.
The forum based in the capital will have centres in three metros - Calcutta, Chennai and Mumbai - along with others in coal producing areas.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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