State-owned mining giant Coal India is hoping to recover around 75-80 per cent of its liabilities from customers with whom it has long-term fuel supply agreements (FSAs), following the Supreme Court’s decision allowing states to recover dues retrospectively.
However, legal recourse is already underway.
P M Prasad, chairman and managing director of Coal India, said, “We are impacted in two states – Jharkhand and Odisha. In Odisha, there will be a hard hit of Rs 35,000 crore. In Jharkhand, the impact is Rs 350-400 crore, which is not a significant amount.”
About 75-80 per cent of the coal has been supplied to big plants with whom Coal India has FSAs. “If I can get 80 per cent reimbursed, then the impact will be around Rs 6,500 crore… provided I can get it back,” Prasad said, on the sidelines of an interaction organized by Bharat Chamber of Commerce.
He was explaining the impact of a recent Supreme Court ruling, which upheld the right of states to levy taxes on mineral rights and mineral-bearing land and said that arrears were payable from April 2005. The demand for past dues will, however, be staggered in instalments over 12 years starting from April 2026.
The state of Odisha had introduced the Orissa Rural Infrastructure and Socio-Economic Development Act with effect from February 1, 2005, levying a tax on mineral-bearing land.
Prasad said that in 2005, the company had gone to court. However, within four months, it had paid the amount under protest. After the state lost the case in the high court, it refunded the money, and Coal India, in turn, returned it to FSA customers.
However, while 75-80 per cent of customers were large and operational plants, Prasad was unsure about being able to collect from the remaining 20 per cent.
“The FSA customers are big plants – they are existing, none has closed. But the remaining 20 per cent is through e-auctions or road dispatches, which go to small players where collection is difficult,” he pointed out.
While Coal India has worked out the impact, Prasad noted that the matter is still sub judice.
He said a three-member bench would be hearing a review in the Supreme Court.
Coal India has seven coal-producing companies. The impact of the SC ruling on five of these coal-producing companies was zero, Prasad pointed out.
Regarding price revision by Coal India, the chairman-cum-managing director said that, as of now, the company is not revising prices. “If we revise, then it will again impact the general consumer.”
First Published: Aug 23 2024 | 8:10 PM IST
