Surplus coal transfer to CIL may lead to quality disputes: DIPP

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Surplus coal from captive mines should not be transferred to the nearest CIL units as that may lead to disputes over fuel quality and result in transit losses, DIPP has cautioned.

The Power Ministry had earlier alleged that the quality of coal supplied by CIL to the power plants is low grade and stones and boulders are being dispatched in supplies even after the introduction of the third party sampling mechanism.

"The surplus coal produced....Should not be transfered to CIL (Coal India Ltd) for its disposal through e-auction as it may lead to number of difficulties," the Department of Industrial Policy and Promotion (DIPP) said in its comments on Coal Ministry's draft policy on disposal of surplus coal generated from captive mines.

"The transfer of coal to CIL is likely to invite disputes with regard to quality of coal and transit losses due to handling and re-handling. Besides additional costs will be incurred without any benefits," DIPP said.

The comments on the draft policy are being sought from various ministries, including Commerce.

DIPP further stated that the quantity of coal transported to the CIL stock yard from blocks may have variations due to so called transit losses or the actual received quantity may be less than the quantity sourced which can lead to disputes between CIL/subsidiary companies of CIL with the captive coal block allocatees.

It is also of a view that a suitable regulator (coal controller) may be entrusted with the responsibility and determination of quality, quantity and reserve price of surplus coal from blocks without actually transferring the coal to CIL.

According to sources, the policy on utilisation of surplus coal from captive mines is likely by month-end which is to be approved after detailed consultations among ministries.

The consultations with other ministries on the policy has begun two-and-a-half years after the proposal was shelved.

The government had earlier said that it has prepared a draft policy on utilisation of surplus coal from captive mines and was awaiting comments from various departments.

"Government has formulated a draft policy on usage of surplus coal, including middlings, rejects, etc, which has been circulated to various ministries/departments for obtaining their comments," the government had said.

The modalities of disposal of surplus coal would be as per prevailing policy and could also include handing over such coal to the local Coal India subsidiary or to any person designated by it at a transfer price to be determined by the government, the government had added.

It had said that in case of violation of norms of the use of surplus coal: "The government takes appropriate action against the allocattee company including de-allocation of the block."

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