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The Ministry of Finance may seek the Union Cabinet's approval for the proposed 10 per cent stake sale in state-owned Coal India Ltd by the end of this month, a senior Coal Ministry official said here on Tuesday. "The proposal is with the Department of Disinvestment under the Finance Ministry. They will place it before the Cabinet for approval may be by the end of this month," Additional Coal Secretary Alok Perti said on the sidelines of the India Energy Congress 2010.
The government expects to mop up Rs 120 billion (Rs 12,000 crore) from disinvestment in the country's largest coal producer, which would be part of the its effort to raise about Rs 400 billion (Rs 40,000 crore) through stake sale in 2010-11. The government at present holds 100 per cent equity in the country's largest coal producer and is likely to sell 63.13 crore shares in the IPO. "The IPO is targeted in August," Perti added.
Out of the proposed 10 per cent stake sale, 9 per cent of the government's equity could be channelised towards the IPO and rest is proposed to be given to its nearly 4 lakh employees.
On the appointment of a regulator for the coal sector to oversea mining activities, proposed auctioning of blocks, coal pricing among others, Perti said government is seeking views from different ministries on the subject and could seek Cabinet nod for the appointment next month.
"We have circulated cabinet notes (for Coal regulator) to different ministries particularly the Law Ministry. It could be taken up by the Cabinet by the middle of May," he said. Coal Minister Sriprakash Jaiswal had said in February the sector would get a regulator by mid-March, after the government introduced the subject to Parliament during the Union Budget 2010.
Perti further said that India may move to a mechanism of linking coal prices to its gross calorific value from the present system of pricing the fuel based on its ash content. "We are evaluating such a move. No timeframe could be given at present," he said. At present, domestic coal is priced based on its ash content, the more the ash content the less would be the price and vice-versa.
Gross Calorific Value system would link the prices to the amount of heat generated by burning a kilo of coal and not on the ash content, which is a global practice. Asked if the proposed international mechanism could lead to an increase in coal prices, Perti said, "No, it will not lead to an increase in prices. But, of course, the gap in prices between the highest grade and the lowest grade would get reduced."