Page 10
of this concept of restructuring of CIL perhaps are not aware
that each of the seven subsidiaries of CIL produces coal under
widely different geo-mining conditions," the official said.
"Fixed prices are dulling the market response of reduced consumption in response to higher prices and reducing the flexibility of the market economy," the survey said.
While breaking-up of Coal India is widely seen as a positive for
the stock's valuation in the bourses, there are contrarian views
too."Restructuring CIL, which essentially involves separating its
subsidiaries and making them independent, doesn't appear
value accretive as it is only a holding company and would lose
its attractiveness once the mining companies are separated," an
analyst tracking the sector said.
The survey also partly blamed stifling regulatory environment
for CIL's poor output. " The slowdown in coal production partly
owes to regulatory issues," it said.
The survey said there is a strong case for "removing pricing
distortions seen by consumers such as administered pricing for
coal."
This will lead to increasing imports, which might create a problem if global prices of coal start rising.
"The cost of imports would have been much higher had there not
been a slide in coal prices in the international markets in the last
two years. With stagnant domestic coal production, coal imports
are likely to surge in the remaining three years of the 12th Plan,"
the survey said.
US EXIM BANK WEIGHS LOAN TO MAJOR INDIA COAL PROJECT
The US Export-Import Bank is considering financing a massive
coal-fired power plant in India despite the fact the Obama administration has called on domestic and global public lenders to
stop funding coal-plants in his climate change strategy.
This opened the window for the India project to apply for an ExIm loan guarantee. The coal project being reviewed by the bank
is a 4,000 MW integrated power plant and coal mines located in
Jharkand.
The board of the Ex-Im Bank, the United States' export credit
agency, voted last December to stop funding coal plants overseas - except in certain circumstances - in response to President Barack Obama's Climate Action Plan, which called on US
and international lenders
to do so.
It had initially been proposed by India's government as part of a
strategy to add an additional 100,000 megawatts of generation
capacity by 2017. Residents surrounding the coal mining and
power project have protested against it.
"We are currently reviewing the application, which
we received last month, to
determine if it satisfies our
criteria of 'reasonable assurance of repayment' and
to ensure that it adheres to
our environmental and
other policies," an Ex-Im
official said.
The Ex-Im bank helps
finance foreign purchases
of US exports. Its future is
currently in question as
Congress debates whether or not to re-auhtorize the 80-year-old
institution, whose funding expires Sept 30. House Republicans
are divided on the question while Democrats largely support it.
Democratic Senator Joe Manchin from coal state West Virginia
plans to offer compromise legislation to renew the bank's charter by five years on the condition that it permanently removes
the restrictions on lending to coal projects.
The Ex-Im Bank in January temporarily suspended enforcement
of a lending ban to high-carbon intensity projects until September due to a provision of a House appropriations bill that defied
the president's climate action plan.
VOLUME 1, ISSUE 8 — JULY 2014
The supercritical plant,
which uses more efficient boilers than traditional coal-fired power
plants,
is
owned
by Reliance Power, Tata
Power and coal mining
company NTPC.
The Ex-Im Bank does
not disclose which US
vendors have applied
for the loan until the
loan is approved.
In 2010, the bank agreed
to $900 million in loan
guarantees from Reliance Power to buy mining equipment from Wisconsin-based
Bucyrus, now owned by Caterpillar to build a power plant in
central India.
Last month, the United States presented a plan to the Organization for Economic Cooperation and Development's exports credits group that would require any new power plant that gets public funding to meet an emission performance standard, emitting
low levels of carbon dioxide.
Multilateral institutions such as the World Bank and the European Investment Bank have also pledged not to finance coal-fired
power plants under most circumstances.