Don't revise rates frequently for huge profits: Panel to CIL
Mar 02 2014 , New Delhi
"The philosophy behind nationalisation of coal sector was to ensure the availability of coal to power sector and other end-users to boost the national economy rather than making huge profits by coal companies by frequent revisions in coal rates," Standing Committee on Coal and Steel has said in its latest report.
It said Coal India (CIL) and its subsidiaries need to "strike a balance between coal production and coal price".
The panel's observations come close on heels of CIL subsidiary Western Coalfields hiking coal prices by 10 per cent in December to fetch additional revenue of Rs 140 crore. All other subsidiaries had hiked prices of non-coking coal in May last year, which is expected to fetch an additional Rs 2,119 crore revenue this year.
The Kalyan Banerjee-chaired panel said it understands that "while meeting the coal demand from different sectors, CIL and its subsidiaries have to make profit for its sustainability" but recommended to put minimum burden on consumers.
"The Committee strongly recommends that while calculating the coal prices or going in for revision of coal prices, CIL and its subsidiaries should endeavour for revenue neutrality as far as possible so as to put minimum burden on coal consumers thus securing their interests and welfare," it said.
The largest revenue contributor to CIL on account of latest price revision would be Mahanadi Coalfields which is expected to contribute Rs 686 crore, followed by Rs 664 crore from Northern Coalfields and Rs 495 crore from South Eastern Coalfields.
Central Coalfields' contribution to the kitty would be about Rs 248 crore, while Bharat Coking Coal would get Rs 103 crore additional revenue.
As a holding company with 90 per cent government stake, CIL has seven subsidiaries which produce coal. Its eighth subsidiary - CMPDI is into design and planning of the mines.
Together, they produce about 450 million tonnes coal accounting for 80 per cent of the country's production.
The coal sector was nationalised in 1973.