Not against coal deallocation, we only want finality: Goyal

A: Why 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 to expeditiously and transparent the auction block 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 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.

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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 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 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 of 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 3000 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.

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Q: Let’s talk about production target – 1 billion tonne coal production target by 2019 – let us talk about the short-term – August 9 percent production. A 100 days ago when you and I had this conversation you had said that anything less than 10 percent is going to be unacceptable to you, the western grid has sent you an SOS, the northern grid has sent you SOS, you have got almost 50 power plant at this point in time running with coal which could last about three days or between three and seven days. What are we going to do in the short-term?

A: When the monsoons were down hydel power was down. I had two options. Let it be a business as usual case and let the people suffer huge outages and load shedding and power cuts or get my whole system activated to increase the production of coal based power and that’s what I did. I choose to do that. For the months of June-July-August as I presented in my report card, the production out of coal based power plant is up 21.6 percent. It is a record of sorts and therefore the most parts of India did not face the kind of outages and load shedding which would otherwise have happened because of the delayed monsoon. When you do that you need coal and I didn’t import additional coal; the import of coal is stagnant.

What I did is I removed stocks which were lying at pitheads for long time and stocks lying at pithead for too long tend to deteriorate, they tend to get into soil, they tend to become dust. I reduced the coal at pitheads by 18 million tonne. I reduced the coal at the plant by 11 million tonne and the balance I gave by increased production of 5.1 percent from Coal India. Therefore, using all these methods I was able to give 20-21 percent growth in coal, obviously the coal stocks are going to deplete faster than normal, but I was able to serve the people and I am working on plant to increase production maybe even import some and quickly recoup this. Fortunately, the rain gods have been kind and power has once again started coming in from the hydel plant.

Q: Let me talk to you about gas and you talk about that in your takeaways as well about the stranded capacity on account of lack of gas now. A committee of secretaries is now looking into this issue and they should hopefully give in their recommendations by the end of the month. Your secretary from the ministry of power is also part of that. What should we expect because this is another area where we haven’t seen too much further momentum?

A: It’s an autonomous committee even though he is my secretary, I do not think he reports to me on that subject and neither do I venture to ask him any questions. I am sure he will look at – he is a very seasoned officer. He comes with many years of experience in this field. I am sure he will look at all aspects and do due justice both to the consumers’ interest and the interest of expanding exploration and production of gas in the country. I am hoping for an early resolution of that problem, so that we can increase the domestic gas availability. In the meantime we are exploring various options to try and see if the gas based plant can also serve the people of India through various pooling mechanisms, import of gas.

Q: Where do things currently stand as far as the notes that were prepared on coal price pooling as well as gas price pooling?

A: There are various suggestions and notes going around the system, in fact I have 263 items on my dashboard which I am monitoring at various points of time.

Q: When can a decision be taken on price pooling on both coal and gas?

A: They will get announced as each one is taken.

Q: Going back to our conversation 100 days ago and we were talking about the financial restructuring plans for State Electricity Boards and you were very hopeful then that things would move quickly on that front but when you spoke earlier, you said that the consultation process continues with three-four state governments. Has there been any further movement on that issue?

A: It’s a federal structure that operated and unless the state gets involved, I am unable to find a solution to their problem, amongst the problems stage which have huge losses, very few states have come forward to sort it out. Rajasthan was the first who pointed out that in the erstwhile regime there was Rs 55,000 crore loss between 2008 and 13 in the Rajasthan Distribution Company (Discom). So, Vasundhara Raje came to me and we have now worked out elaborate plans, how we are going to sort out the state power woes. Similarly Andhra Pradesh talks to me and we worked that out, Delhi has had a conversation and we worked that out. Finally, I got a call from the Uttar Pradesh Chief Minister and we are hoping to meet soon after the by-elections get over. We will start working on plan in UP, if UP is keen take it forward on the mission mode. I am sure we will take up each state because ultimately one size fits all formula doesn’t work in this sector.

Q: But 3.5 lakh crore in debt, 2.5 lakh crore in losses and so on. What then happens to your 24/7 power for all dream?

A: I will still achieve it but to get it moving I need to work closely with the states. I need to work practically and pragmatically and you must recognize, I have inherited this and when you inherit something even the debt as a good Indian maybe like the Japanese, I think that debt has to be paid back by me and I stand committed to resolving this problems and taking the country to 24/7 power.

Q: What about the issue of compensatory tariff. We have the Adani’s and Tata Power’s of the world seeking the power ministries intervention but I believe you have taken a hands-off approach. You were saying that this is a matter between the regulator, state governments and power companies and your ministry cannot intervene in this?A: Not at all, I am not one of those who shirks away from any responsibility ever in life. A) The private producers haven’t written to me and they have no business to write to me because I have no contract with them. The contract is between certain private producers and the states. At the moment five states are affected but going forward I see more states getting affected because the principle will apply to other plants also. The issue was flagged off soon after the judgment came on August 25 to the honourable Prime Minister by a senior leader from Maharashtra. Thereafter I went and met the honourable Chief Minister, Deputy Chief Minister and other leaders of Maharashtra in Mumbai soon after Ganesh Chaturthi. I had detail discussions with them. However, what I found was that the states were not willing to take a call or take a decision but were hoping that the center will decide for them. Now in federal polity you and your channel would be the first to start criticising me for interfering in the states and tomorrow the states would say we don’t want to pay a higher tariff, the center is directing is to pay; that is not my job. I can play the role of a facilitator on their request. I kept a meeting in Delhi where I called the five Power Ministers and the Power Secretaries; I facilitated free and frank discussions. After the discussions I thought the five states were broadly in agreement on the way forward unfortunately they have not moved to the next level of going to the court and trying to resolve the matter. I cannot go to the court; I have no locus standi in that case. So I am not shirking any responsibility. I am certainly in the words of the honourable Chief Minister of Maharashtra, which is also my home state and I am very passionate about that state, I am not shirking from any leadership issues. I am willing to demonstrate leadership but then the states have to show the action. I can show ideas but in a federal polity they have to act. Q: But that brings me back then to the target that you had set for yourself and the country which is power for all given the fact that state government after state government and you are pointing out that the challenges of being able to function in a federal structure how are you going to be able to sort any of this out?A: I will tell you why I will be able to sort it out. A) Most of the states are coming around to talking and trying to find solutions. I don’t know why these states have a problem, maybe it is the heat of the election season but as far as I am concerned, every state with whom I have had a dialogue and my dialogues mind you are not cursory meetings and are pleasantries; half the time we don’t even exchange flowers. They are business meetings, I have all of my department people, senior people with me, I invite all the state government people, we flag off issues one after the other, I have in my office every single issue that I have with every state government, I in fact showed it in the parliament in the Rajya Sabha the other day. I have issues flagged off with each states, I talk to the states, I am willing to help them if they are willing to help me resolve the problems that are required, I can tell you every state will come online, every state will realise that the people of India will not forgive anybody who does not give that 24/7 power. I am fairly confident in the days to come the few states who are holding out will also come onto acting along with the center to resolve the power shortage.Q: Any forward movement on Ultra Mega Power Projects (UMPPs) Tamil Nadu, Orissa?A: The UMPPs have been bid out, expressions of interests had come from many people. Certainly some bidders and some bankers in my interactions, and I have frequent interactions with all stakeholders in this sector, have flagged off certain issues, I have not yet applied my mind fully to it because there are a lot of court cases which will set the tone and direction for the future. Once these cases come to some finality I will be able to know what is the way forward also for the UMPPs.Q: At this point in time going back to the coal block auction issue when we spoke 100 days ago you said that you were hoping to put in place a plug and play model where your ministry would play facilitator, acquire all the clearances that were required for the block to be auctioned and extract better valuation, are you going to have to dump that idea if the court were to say now, because of the lack of time and the fact that you will perhaps be stuck with disruptions?A: I had explained to you, it is so simple. Lack of time is not related to the date of auction, it is related to date when mining starts. Now if I do that facilitator’s role and I get all the approvals and then auction or give it out through a transparent process the person who bids will be happy to pay a higher value because he won’t have to go running around the corridors of power and various ministries in the centre and state; something which the government which works without silos and without departmental obstacles we can do better at our end.So maybe the auction maybe slightly delayed but the time to mine will be advanced. So my focus is how quick can I get the coal out. So you missed the point; the auction date is not what is important. So it will not delay anything, it will in fact cut down the time.Q: But an auction date, if you were to start the process of doing auctions for instance once the Supreme Court is out you put your terms of reference in place and so on and so forth the earliest this calendar year because that would also then determine when you are going to be able to produce or start producing from those mines are an option?A: Yes, but if the mine doesn’t have its mining plans, it doesn’t have land, it doesn’t have environment clearance somebody has got to do it. The private sector will do it at a certain timeframe. I have to assess if I can do it faster. If I think I can do it faster then I would rather do it and then auction or give it out in whatever best manner all of you all can come up with. If I think they can do it faster then I will auction it as it is. So I am not ostrich about any of my views.Q: But auctions you think by the end of this calendar year, before the end of the calendar year?A: That depends on the status whether if some of them may have mining plans, some of them may already have land, we could auction them faster. Some of them prefer to auction without getting into these problems if we feel that rather than government doing it private sector maybe more efficient.