SME Times News Bureau | 09 Dec, 2009
Industry body ASSOCHAM Tuesday suggested to the government to set up a coal trading company to import the dry fuel to bridge the demand-supply gap.

The entity could be found on the lines of public sector MMTC and it should sell coal to user industries in the country through a long-term agreement, ASSOCHAM said, presenting a study it undertook jointly with global consultancy firm Ernst and Young to the Finance and Coal Ministries.

"To facilitate this, it should set up huge Regional Coal Dumps located strategically to optimize procurement of both indigenous and imported coal with appropriate connectivity to mines and ports," the study on domestic coal industry added.

The study also pointed out that lifting of mined coal from the coal companies in India and ensuring coal supply to user industries would also be the complete responsibility of the proposed Coal Trading and Infrastructure Company (CTIT).

Releasing the study, ASSOCHAM President Swati Piramal said that coal movement to and from the Regional Coal Dumps could be through a dedicated railway network, owned and managed by the suggested company.

The study said that the proposed CTIT, besides bring in a sense of competition in the otherwise monopolistic sector, would also open up significant new possibilities of locating very large thermal power generation capacities in the country by establishing radial connectivity with the Regional Coal Dumps, offering the benefits of mine mouth operation.

The suggested entity should also be entrusted with the task of dealing with uncertain demand for coal through procurement of large quantities of coal from the indigenous coal industry under an enforceable Coal Purchase Agreement, stressed Piramal.

The study said that there was a steady growth in dependence on imported coal in the country, not just for the coking coal but also in case of thermal coal.

Coal imports that stood at about 25 million tones in 2003 grew to nearly 50 million tones in the year 2008. Even during the current year, there have been persistent demands for coal imports by user industries.

"Given the limitations in blending of imported coal with indigenous coal, it may not be long before India start planning series of coastal power plants, exclusively based on imported coal." the study said.

In fact, isolated efforts were already on to meet the demand for coal through imports from countries like Australia, Indonesia and others, it added.