The Supreme Court has ordered companies to pay a levy of ₹295 for every tonne of coal they extracted from the captive mines allotted to them, with retrospective effect.
The decision will impact 37 operational mines — including 14 operated by six power generation utilities — that were de-allocated.
Only the Tasra coal mine in Jharkhand being operated by State-run Steel Authority of India survived the de-allocation.
The State utilities of West Bengal and Rajasthan control six and three mines respectively.. The rest had one mine each.
Eight out of 14 mines fuel electricity demand in West Bengal. Naturally, the State has to bear the maximum brunt of any retrospective payment. More so because all such mines have been in operation for a decade or more.
The West Bengal sutility, for example, has already mined 65 million tonnes (mt) of coal and should now cough up around ₹1,800 crore as penalty.
Similarly, CESC, which meets 50 per cent of its 6-mt annual fuel requirement through captive sources, is believed to have mined nearly 15 mt coal, attracting a levy of ₹440 crore. Company officials were not available for comments. Punjab may have to pay around ₹800 crore.
Miners’ gains While the market price-driven sectors such as steel and cement have no option but to absorb the shock, it would be ironical if the electricity regulator allows the power generation companies to recover the cost from the end-consumers.
This is because the captive miners have been transferring fuel to the utility at prices equivalent to (or at a marginal discount to) the prevailing tariff of fuel supplied by Coal India Ltd (CIL).
Whenever the national miner increased prices, the transfer price of captive miners and the electricity tariff paid by the end-consumer also went up. The gain is usually pocketed by mining outfits.
So far as State utilities are concerned, the gain was pocketed by the private sector miners, like EMTA Ltd. EMTA struck 74:26 joint ventures with Bengal, Punjab, Karnataka and DVC, and transferred the fuel to the power utility at a pre-decided discount to the CIL price. EMTA gained. Electricity consumers didn’t. It would be ironical if they are asked to pay more for the penalties.