"In a buyers' market, when ECL coal prices need to be competitive to ensure retention of linked consumers and other buyers, it has lost its competitive edge and losing consumers," ECL's Coal Consumer Council member and Biju Janata Dal secretary Manas Ranjan Mallick told The Financial Express. "On the one hand, rural employment cess (RE) and primary education cess (PE), being levied by the West Bengal government, is making ECL coal dearer. On the other, many companies are importing cheaper coal at the cost of Indian coal companies, includingECL," he pointed out.

The West Bengal government introduced RE and PE cess at the rate of 17 per cent from October 1, 1993, which was increased to 45 per cent in 1996. However, considering the plight of ECL arising from accumulated losses, the state government reduced the cess to 25 per cent. It includes 20 per cent RE cess and 5 per cent PE cess.

But the fact remains that ECL's coal prices are still not cost competitive compared to the prices of Bharat Coking Coal Ltd (BCCL) and South Eastern Coalfields Ltd (SECL) for similar grades, Mallick said.

As on date, ECL prices are higher by Rs 389 per tonne against BCCL and by Rs 301 per tonne against SECL for grade B coal. For C grade coal, ECL coal is dearer by Rs 327 per tonne than BCCL and by Rs 252 per tonne than SECL coal.As a result, ECL failed to bag the orders of the cement plants. At one point of time, ECL used to supply 7,75,000 tonnes of higher grade coal from Ranigunj coalfield to 22 cement plants. And in 1998-99 fiscal, ECL supplied only1,81,000 tonnes to eight cement plants.

Not only cement plants are keeping away from ECL. Even state electricity boards are also not lifting coal form ECL because of higher price. ECL lost linkage of Punjab SEB and of Badarpur Thermal Power Station run by NTPC has also been reduced for the same reason. Even Tamil Nadu Electricity Board is reluctant to draw their full requirement.

"Hence, to make ECL coal cost competitive, these cesses need to be withdrawn and replaced by comparable royalty as being levied by other state governments," Mallick said and added that ECL's performance also needs to be geared up. He also demanded that the Union government should impose anti-dumping duty on imported coal to save the domestic coal industry.

The following excerpts of the Calcutta high court's judgment on the case between Kesoram Industries Ltd and Coal India Ltd and others may be referred in this case: "We hold that the levies in question are unconstitutional. However, the appellants will not be entitled torefund of any cess collected under the provisions of the Cess Act, 1880, the West Bengal Primary Education Act, 1973 and the West Bengal Rural Employment and Production Act, 1976 or the amended provisions thereof by the West Bengal Taxation Laws (Amendment) Act, 1992 up to the date of this judgment.

"The state is restrained from levying any such cess and any further and CIL and ECL are also restrained from including in the bills any amount on account of cess any further. It is also clarified that after the date of this judgment the authorities concerned will not enforce the provisions of the said three Acts in any manner whatsoever."

However, West Bengal government got the above order stayed and ECL's appeal is pending in the Supreme Court. The Coal Consumers Council is planning to adopt a resolution and to place it before the Supreme Court for the apex court's consideration in the interest of ECL's immediate survival and long-term viability of the company, Mallick said.