A Conflict Of Interests

  • 02/06/2008

  • Business World (Kolkata)

India Inc. is embroiled in a war of words with Coal India (CIL), the country's largest producer and supplier of coal. With an annual production of more than 350 million tonnes of raw coal last year, Kolkata-based CIL meets the coal requirements of more than 80 per cent of the industry, which gives the government-owned and run company a near monopoly status in the coal market. Traditionally, allocation of coal was done by CIL in consultation with the Ministry of Coal. The industry was divided into core and non-core sectors, and the priority for CIL was to meet the coal requirements of the core sectors first, which included steel, cement, power, fertilisers, etc. These dealings took place under a 5-year fuel supply agreement (FSA) between CIL and the industry. While CIL catered to the demands of the core sectors, its nine subsidiaries met the demands of non-core sectors on the basis of the installed capacities of the registered buyers at preset prices. But the announcement of the New Coal Distribution Policy (NCDP) by the coal ministry in October last year