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Coal minister Piyush Goyal’s decision to halve the quantity of coal that Coal India sells through e-auction is in a bind as Prime Minister Narendra Modi’s office wants the ministry to first assess the revenue loss and redistribution dilemma it would bring to the state-run miner.
The Prime Minister’s Office (PMO) wrote to Goyal’s ministry on August 1 asking it to spell out the implications of the e-auction quantity cut and submit an outcome note for examination.
“This (reduction) has financial implications. The reduction may also pose other problems related to allocation. It is, therefore, important that the implication of the decision should be examined at the highest level,” the PMO wrote to coal secretary SK Srivastava.
Goyal said he was unaware of the PMO’s letter. When told that it was the result of a meeting between his officials and the Principal Secretary to the PM, he said,“If there is any additional information then I am not aware of it.” The file relating to impact assessment has been with Goyal for the last three weeks, said sources.
Documents show that PM’s principal secretary sought a status paper on the impact of the e-auction cut at a meeting on July 26 with coal ministry officials.
Subsequently, the ministry informed the PMO that the cut would lead to over Rs 2,800-crore loss to Coal India besides diverting coal to big power corporates at the cost of small consumers.
It said the reduction of e-auction sales from 58 million tonnes to 25 million tonnes would entail a sales revenue loss of Rs 2,838 crore calculated on the basis of the difference between the e-auction price and he notified price of Rs 860 per tonne.
It also clarified that Coal India’s approval was on condition that any “adverse financial impact” of the e-auction cut would be neutralised by a “price rationalisation” of coal sold under government-controlled notified prices which are nearly 40 per cent lower than the e-auction rates.
Goyal, who also heads the power ministry, announced in Rajya Sabha on August 6 that e-auction coal quantity would be cut to make more coal available for power projects. He wants the released quantity to be added to the coal pool which is sold at the notified price to power projects.