 "Govt will not interfere with SC decision on coal allocation: Power Minister Goyal")
As the date for the Supreme Court’s decision in the coal allocation case draws near, Power Minister Piyush Goyal said the government will not interfere with court’s decision, but made it clear that they are not making a case for exemption for any player.
On e-auction, he said that the government is very clear that one company’s profits can’t be more important than the greater good and a cut in Coal India’s e-auction volumes is almost a done deal.
Below is the verbatim transcript of Piyush Goyal’s interview with _CNBC-TV18’_s Shereen Bhan.
Q: The many achievements that you have listed in your report card. The achievements during the first 100 days and you also spoke about how this has been a trial by fire for you, your initiation into these ministries has been trial by fire but would you say that your real test will start on September 9 when the Supreme Court passes its verdict on what it intends to do as far as coal block allocation is concerned?
A: I am on test every single day and September 9 will be one more day in that stream of days. I am in fact very much hoping that September 9 will show some finality to this long pending dispute. I do hope on September 9 the decision is final and I am able to move forward so that I can find solutions to this big problem of increasing the coal production and reduce our dependency on imports and increasing the generation of power. So, I am in fact eagerly looking forward to this date.
Q: I don’t expect you to pre-judge what the Supreme Court is going to say but I want to quote from your own booklet where you say that the government is ready with a plan subject to the outcome of the Supreme Court’s judgement. What are the scenarios that you are working with? The worst case scenario I would imagine would be the Supreme Court saying that all 218 blocks have to go? What is the best case scenario that the government is hoping for?
A: I have no worst case or best case whether they deallocate all 218 or any number of them. For me, I am agnostic to the decision.
Q: Can you really be agnostic given the fact that this is going to disrupt the economy?
A: I can assure you nothing will get disrupted. We value and respect the judgement of the honourable Supreme Court. I am sure the Supreme Court is seized of all the ground realities, they asked us to present information about the blocks which are already producing or which are ready to produce, which we shall furnish to the court. As far as the Government of India is concerned, we certainly do not want to suggest any particular course of action. Once the Supreme Court makes up its mind, what it wants to do, we will expeditiously get into the act of taking the process forward in a transparent and honest manner to discover the price given to people who deserve it, who are most competitive in their proposals and in that process I am confident, if at all there is a disruption we will keep it to the bear minimum.
In any case these coal blocks produced barely 37 million tonne last year and maybe 50-52 million in the current year. So, there will be a certain short-term disruption but in the medium to long-term we will be able to open up many more mines much faster. However, for the last many months now we have not been able to give mining leases, we have not been able to open many new mines which are ready to produce. I think all of that can get expedited.
Q: How quickly will you be able to undertake auctions if indeed the court cancels 218 or exempts the 46 that you are hoping that the court will exempt?
A: I would like to correct you that I am not hoping they would exempt any particular blocks - that has not been the case of the government either in the hearing on the 1st or in the hearing on the 9th, we are not hoping for any particular dispensation for a set of people. We are only looking for finality of the process.
Q: Is the government not keen that the 46; 40 which are already operational and six which will be commissioned by March next year, these should be exempt?
A: The government is not interfering in the process of the court - that is for the court to judge and decide. The government has only appealed that whatever decision the court takes should be final and should not be left to any further committees that is the appeal that we have made.
Q: Is that the worst case scenario that they will setup a judges committee to overview and overlook the situation?
A: I would not like to comment on that, but the important thing is that we have finality in the decision and with that finality we move forward. As far as the 40 and 6 blocks are concerned, the information for by the court is been provided for appropriate decision at the end of the Supreme Court.
Q: How soon depending on what the court decides to do can we expect coal block auctions and what is going to be the principal driving the coal block auctions; are you going to go the 2G and the 3G way where revenue maximization became the guiding force for the government?
A: There are two issues in these - as far as the time concerned to auction, I am exploring various possibilities while there maybe some mines which maybe ready to produce, already producing, we do not know, there are various scenarios, so it is very difficult to put a time limit to it but on a broader perspective my driving force or the driving principle is that the time to mine should be the fastest. There maybe certain mines where I would rather explore the mines do the environment clearance mining plan approval and then auction it, similar to the ultra mega power projects (UMPP)model.
Q: The preference will be the explored mines should go first on the block?
A: Should go out in the market first so we can start getting production out of that also whichever are not explored or not ready to mine, I am looking at the option of doing that process so that I get better value and I am able to get production out of those mines faster. I believe in the organic way of working that the Government of India today is working seamlessly without departmental hurdles, I think we can get all those approvals much faster than a private entrepreneur can.
Having said that in terms of revenue maximization, I think different sectors will have different viewpoint, for example there are certain regulated sectors like power and fertilisers, where coal is only a pass-through, where the cost of coal will be pass-through and the end customer has to pay for it. In those sectors revenue maximization will not be the criteria but within constraint whoever gives us the best value and was the ability to mine will have to be the criteria for the non-regulated sectors. We could look at trying to maximize the revenue.
Q: By when do you expect the terms of reference to be prepared and since we do not have a coal regulator and that’s one thing that is missing in your 100 day achievement, you don’t talk about even the intent of setting up coal regulator. Will it be dealt with only by your ministry or are you looking at bringing in independent outside experts to put together the terms of reference?
A: My whole style of working has been very inclusive. I have a board led by the honourable Suresh Pradhu, former power minister and some very illustrious persons in that. My whole approach is to build a consensus amongst my three ministries, crowd source ideas. I generally believe in having an open mind to new thoughts and new ideas, in that same respect the auction process or whatever is the transparent process by which we discover the price or the mechanisms by which we give these coal blocks, will come out of the wider consultation within and outside the government. Hence timeframe is difficult to put today till we hear the final judgement and we are able to put the people together to work on this proposal.
Q: My final question on the coal block allocation issue, in the short-term how do you intend to deal with the disruption if there were to be de-allocation ordered by the court?
A: The worst case I can always import coal. Today imported prices are quite reasonable. There is no great stress on the system.
Q: Is that the only viable option that you will have?
A: Yes, certainly we cannot produce coal out of thin air.
Q: Second question that I wanted to get a clarification on as far as the auction process is concerned, will there be a right of first refusal (ROFR), people who lose these mines, lose these licenses will they have a right of first refusal?
A: We will have to wait for the honourable Supreme Court’s decision in the matter and if they pass any particular order giving any such right or not. I will wait for the honourable court to decide on this matter.
Q: Just taking this argument forward and again that is something that is missing from your 100-day achievements or even your intent mission statement that you have put out. The Coal Mine Act and appropriate amendments to that to really encourage private sector participation which is now become a problematic area post the Supreme Court judgement of the 25th as you would imagine. No mention of that, is that not the priority for you and your government?
A: Any such steps will have to be seen in the context of the time that it would take to achieve the privatisation or any such new thinking in this sector and the importance of trying to enhance production in the short run. My focus today is for the short run, we have a coal shortage in the country, we have a problem all across the country of power plants lying ideal, lakh of crore of rupees which are stuck in banking sector because of ideal plants or stranded plants. My focus in the short run is to achieve better coal production, higher coal production and improve the whole power scenario. We can look at these ideas at a later stage.
Q: Let me ask you about Coal India because there has been opposition by the union to the disinvestment process, there is also a demand from the union that if these blocks were to be de-allocated then Coal India should be given these blocks as has been the case previously as well. On both those issues how do you intend to get the union on board? Is the Coal India disinvestment going to go ahead and do you believe that there is a case for Coal India to be allocated the de-allocated blocks?
A: As I said earlier I believe in consensus building. I will have a dialogue with the trade unions on various issues, I am open to their suggestions, I may give them a suggestion or two and I am sure we can maybe come to terms which is a win-win for both the government, the people of India and the trade unions particularly because the trade unions and the employees of the CIL and other coal companies and the government of India are both there to serve the interest of the common man. If all of us agree on that one principle there will always be the right way to do a certain thing.
Q: So higher employee quota within the retail quota is that the mechanism that you are looking at?
A: That I will leave for the business channels to keep imagining what new ideas can be brought in.
Q: Do you believe the Coal India disinvestment will go through this calendar year?
A: I think everything is possible. Look at solar; we inherited anti-dumping duty recommendation which was passed on May 22; four days before being sworn in as Minister. That was an issue which by and large the whole world thought would be impossible to resolve. On the one hand you had to protect domestic manufacturing - we believe in ‘made in India’ being stronger. You heard Prime Minister Modi from the Red Fort let us be proud of ‘make in India’ and we wanted to also ensure the solar mission doesn’t fail. All we had to do was sit down on table in the room next door, we had a long meeting where we heard everybody out, we understood their pain points, got to the causes of their agony, we resolved them. They trusted us and that is how we are able to resolve an issue of international dimensions.
Q: One more question as far as Coal India is concerned and there has been no gentle nudge from your ministry to the Coal India board to cut the quantum of coal under the e-auction process. You are hoping for an almost 50 percent cut though you don’t mention the figure here in your booklet where you just say that significantly reduce the e-auction quantity from 58 million tonne. This is again an issue where the Coal India board has opposed this particular move. Have you been able to convince them, is the board now in agreement on cut in e-auction quantity?
A: Incidentally e-auction was meant to serve a certain section of the users who are small and dissipated all across the country. When I came into the ministry I found that a large part of the e-auction coal was going to the power sector who were buying them at inflated prices which would ultimately cost the consumer. Since coal is a pass through, buying coal at such high prices was only leading to an increase in the price of power.
Q: So even if it means taking away Rs 3,000 crore from Coal India, you are saying that it is okay?
A: There are times in life when you have to look at the country’s interest and go beyond the revenue or the interest of only a certain company or a section of society. I think that is the challenge before a government where it has to look at national interest, consumer interest. The country still has large sections of people who are suffering. I think the small thinking of what will happen with that and I don’t think it will be even Rs 3000 crore - that is a calculation you may have made. Look at the international prices today; they are almost at par with domestic prices. In fact I may have to reduce some of the domestic prices to encourage people to buy coal particularly at the higher levels.
The board has not written to me or asked me to reconsider anything, why I did not write a figure is because I am not running Coal India, it is an autonomous body. I had only made an appeal to Coal India to restrict the quantity to the required amount. Originally it was expected to be 5 percent of the production. I think somewhere along the line somebody got greedy and I would only appeal to them and I think they accepted that appeal. The last I heard was that they were very happy to accept the revised plans of reducing the e-auction. Certain operational difficulties will come in certain places - there may not be enough railway rates, all of that maybe factored in and maybe it may not be 25 maybe 27, maybe 28 - I am not nitpicking on small numbers. It is the concept.
Read the entire interview here.
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