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Citing federalism, state writes to protest coal price formula

Calcutta, Jan. 2: The Mamata Banerjee government has challenged the Centre using the federalism argument again, this time over Coal India’s decision to adopt a new pricing formula.

According to government sources, power minister Manish Gupta sent two letters to his central counterpart Sushil Kumar Shinde and Union coal minister Sriprakash Jaiswal this evening after Mamata instructed him to write to the Centre slamming the “anti-people measure” of switching to a new method of coal pricing that would deal another blow to the cash-strapped state-owned power utilities in Bengal.

Gupta said he had requested Shinde and Jaiswal to put the decision on hold. “I have sent them the letters. The move has to be kept in abeyance. It lacks transparency and does not make sense in terms of policy or methodology,” he told The Telegraph.

Earlier in the day, Coal India issued a notification marking a shift from the Useful Heat Value method to the Gross Calorific Value method in an attempt to bring about parity in coal pricing with international markets. (See box)

Although the notification means that the new system has come into effect, the Bengal government hopes to persuade the Union coal ministry into stalling it.

This is the third time in four months that the UPA’s second largest constituent has confronted the Centre to “protect the interest” of the state.

In September, Mamata had forced the Union government to stall the signing of the Teesta water-sharing agreement with Bangladesh during Prime Minister Manmohan Singh’s visit to the neighbouring country as the state had not been consulted when the draft of the deal was prepared.

Last week, the Trinamul chief emerged as the champion of federalism during the debate on the Lokpal bill in the Rajya Sabha. Trinamul’s insistence that the word Lokayukta be removed from the bill was one of the key reasons why it could not be passed in the Rajya Sabha despite the Lok Sabha’s clearance.

“The chief minister is peeved with Coal India’s move. She feels it is a unilateral, anti-people decision. After the Lokpal issue, this is another attack on the federal structure of the country, she feels,” a Writers’ source said.

Although coal is a central subject and the states do not need to be consulted about sectoral reforms, Mamata has her logic. “She feels that coal pricing affects all states and so they should be consulted before such decisions are taken. She is speaking on behalf of all the states,” a senior state government official said.

The hike in coal prices will affect all state-run power utilities, especially those in Bengal. With Mamata not allowing a tariff revision, the projected losses of the three power utilities WBPDCL, WBSEDCL and WBSETCL for this fiscal have been pegged at Rs 2,400 crore.

Power-generation company WBPDCL buys 53,000 tonnes of the fossil fuel daily from Coal India at Rs 10 crore a day.

Most of Bengal’s state-run thermal power-generating units are old and can run only on best-quality coal. As the prices of such varieties of coal will go up by around Rs 800 per tonne because of the new mode of pricing, the power utilities in Bengal will suffer the most.

The state has also requested the Centre to ensure the setting up of the proposed coal-regulatory commission to oversee the pricing process.

Gupta said the government was a party to green activist Subhash Dutta’s PIL in Calcutta High Court against arbitrary price hikes by Coal India. “The matter will come up for hearing on Wednesday. The Odisha government will move court against the move (to switch to another mode of pricing). Other states will also protest. This cannot be tolerated.”