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PMO halts policy on use of excess captive coal

The prime minister’s office (PMO) has directed the coal ministry to put on hold its policy that bars captive miners from excess production. This is an exceptional case where a policy approved by a cabinet minister and made public on the ministry’s website has been stalled. PMO’s intervention follows a tussle between coal and law ministries over notification of the policy that is silent on diversion of excess coal from ultra mega power projects.

The law ministry objected the policy saying it was in contravention to government’s stand in Sasan ultra mega power project where Reliance Power has been allowed to use excess coal from attached mines in another project it plans to develop.

Comptroller and Auditor General of India has questioned the special dispensation to Reliance Power and the matter has been referred to Attorney General for opinion.

A senior coal ministry official confirmed PMO directive to keep the ‘disposal of surplus coal, washery products and other carbonaceous products’ in abeyance until further interministerial consultations.

Former power secretary Anil Razdan said such move was exceptional but not unheard of. PMO has right to override depending on the situations.

The law ministry has argued that the policy proposed by the coal ministry would be in conflict with decisions taken by the EGoM on allocating coal blocks to UMPPs. It has also noted that the government has defended in courts the decision to allow surplus coal of a UMPP for another project.

“A careful examination of the proposed directives reveals that the same are not in accordance with the decision taken by the EGoM on coal blocks allocated to UMPPs and the stand taken before High court and the Supreme Court…. Further the status of the coal blocks already allocated to UMPPs should be clearly indicated to avoid any legal complications and embarrassing situation at a later stage,” the law ministry told coal ministry in a written missive.

The coal ministry, in it reply had told law ministry that the directive signed by minister Sriprakash Jaiswal was final and the later should limit its advice.

Coal ministry on December 13, 2011 posted the finalised policy on its website and withdrew it after a few hours. The policy mandated that excess production from captive mines due to unforeseen circumstances be sold to Coal India at price lower than production cost.

Private companies, which were opposing the policy, cheered the PMO direction. Association of Power Producers director general Ashok Khurana said the policy was anyway inconsistent with the need of the hour.

Power companies had asked coal ministry to review the policy as coal shortage affected about 41,000-mw electricity generating assets.

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