Maharatna Coal
India on Sunday said its profitability would be eroded by about 2,000 crore per
annum post enactment of new mining bill which mandates coal miners to share
26%of their profits with project affected people.
According to
Mr. N C Jha, “It (new mines bill) would hit the profitability of the
company by about 2,000 crore. If the government wanted to maintain the profit
of the state-run PSU, it would have to resort to hike in coal prices.”
If the
profit of the company has to be maintained it has to be done by increasing the
prices of coal. Therefore, it is for the government, which is the major
shareholder of the company, to decide whether to go for price hike or
not. Mr. Jha added.
Jha earlier
this month had said that the additional cost impact, due to the new act, will
eventually be passed on to the consumers. The Federation of Indian Mineral
Industries (FIMI) too had said on Saturday that prices of all minerals will go
up due to the new Mines Bill.
The domestic
coal prices range between 770 and 1,700 a tonne at present.
The government
on Friday approved the landmark the Mines and Minerals Development and
Regulation (MMDR) Bill which provides for miners to share 26% of their net
profits for the people affected by the coal projects, while the burden on the
non-coal miners will be amount equivalent to royalty.
Jha exuded
confidence that despite a dip in company's profit after the enactment of the
new law, the state-run company would benefit in the long-term by getting land
without hindrances and this would ultimately improve its bottom line.
“In the
short term Coal India would of course witness a dip in its profit but in the
long term it would be beneficial as with more land with the public sector firm
the business volume would increase and the profit would automatically
increase,” Jha said.
The
state-owned miner, which accounts for about 80% of the country's total
production of coal, had reported a consolidated net profit of 10,867 crore in
2010-11.
Meanwhile,
CIL on Sunday said it may invest up to 40,000 crore in the 12th Plan Period
ending 2017 towards mines' development for augmenting production. “We will
spend anything between 35,000-40,000 crore in the 12th Plan for development of
new projects, buying machinery and building washeries, among others,” Jha
said.
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