scorecardresearch

Engineers’ body says Centre must compensate states for coal imports

In a letter to Union power minister RK Singh and marked to chief ministers of all states and Union territories, the chairman of AIPEF, Shailendra Dubey, demanded that if states are forced to import coal, the Government of India must bear the additional burden of import, so that the financially distressed discoms and the common consumers are not burdened further.

coal imports
According to the letter, since all the thermal stations have been envisaged, designed and constructed on the basis of domestic coal from linked mines, there was no arrangement for blending of domestic with imported coal.

Even as most states, barring a few, have fallen in line with the ministry of power’s (MoP) directive and started the process of importing 10% coal to meet the shortage of domestic coal, the All India Power Engineers Federation (AIPEF) has urged the central government to compensate each and every state that is being forced to import coal in absence of adequate domestic coal. In the absence of this financial help, the financial condition of the utilities will deteriorate further, it said.

In a letter to Union power minister RK Singh and marked to chief ministers of all states and Union territories, the chairman of AIPEF, Shailendra Dubey, demanded that if states are forced to import coal, the Government of India must bear the additional burden of import, so that the financially distressed discoms and the common consumers are not burdened further.

Stating that the coal shortage did not develop overnight, but was the result of a systematic policy failure and gross mismanagement on part of the central government, Dubey said that the states should not be loaded for the follies made by the Centre. “The present coal shortage is the combined result of a number of gross policy errors of the Centre, with the crisis made worse due to shortage of railway wagons. The decision of GOI to take away Coal India’s accumulated revenues of `35,000 crore in 2016 as dividends could have been used to develop new mines or expand the existing ones. Had this surplus been ploughed back into mining, it would have ensured growth in Coal India output and the present shortage would not have occurred,” he said, adding that keeping the post of CMD CIL vacant for a year was also a reason for the present situation.

He also highlighted the shortage of wagons to ferry coal, and said while there was a requirement of 441 rakes per day for movement of coal, the availability was only 405 rakes per day. “In a situation of shortage of wagons, if and when coal imports start, the priority of wagons would be given to movement of imported coal, with the direct result that movement of domestic coal would suffer,” the letter added.

“The GOI itself is responsible for coal shortage and the additional charges on account of imported coal must be borne by the central government only. It would be grossly unfair to load the burden of GOI policy blunders on the state thermal stations. The additional imports must be made available to states at the prevailing CIL rates, while the difference must be paid by the GOI. The financial load of coal import on the states must be withdrawn as states cannot be penalised for policy lapses of the GOI,” he wrote.

The letter states that the state-owned thermal stations are planned and constructed only after obtaining the clearance of the railway ministry to move the coal from the linked mines up to the thermal station, and at this stage it would be unfair to burden the states for the high cost of imported coal, especially when wagon shortage was one factor responsible for the prevailing coal shortage.

According to the letter, since all the thermal stations have been envisaged, designed and constructed on the basis of domestic coal from linked mines, there was no arrangement for blending of domestic with imported coal. “The risk of temperature variations in boilers due to uneven mixing would increase incidents of boiler tube leakage,” it said.

Appealing to chief ministers of all states & Union territories to take up the issue with Centre at top priority, the letter states that the present crisis is the result of policy failure of the GOI and lack of coordination between different ministries.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.