Expansion Not Acquisition Government's New Mantra on SCCL

Published: 25th January 2015 06:00 AM  |   Last Updated: 25th January 2015 06:00 AM   |  A+A-

HYDERABAD: The Telangana government’s plan to acquire Centre’s stake in Singareni Collieries Company Ltd (SCCL), the largest PSU in the new State, is unlikely to fructify. Even as experts are advising the government that it may not be a wise move, the chances of the Centre agreeing to give up its control in the coal mining company also appear remote for “strategic reasons”.

Mantra on SCCL.JPGFollowing up on Chief Minister K Chandrasekhar Rao’s announcement sometime ago that the State would like to fully own SCCL, the State government had written a letter to the Centre expressing such an intent. However, it has not received any response so far. The State and the Centre have a stake of 51:49 in the company. “Normally, takeover of a company is primarily considered when one intends to gain control over management or loses heavily by way of profit-sharing. Neither of the scenarios exist in respect of SCCL,” a source explained. Even now, the State government has total management control and the freedom to run the company the way it wants. The dividend the company pays to the Centre — a little over `100 crore in profit-making years — is negligible given the `7,000-8000 crore the State has to invest if it has to buy up GoI’s stake. The latest thinking seems to be that the State and SCCL would do well to invest that kind of money in new mines given that it requires huge capital investment. In fact, the profits too could be ploughed into capital investment on new mines, obviating the need to pay dividend.

Expansion Not Acquisition Govt’s New Mantra....

In the wake of the Supreme Court cancelling coal allocations made by the previous government, the NDA government has now decided to earmark 36 of them for central and state PSUs. The Telangana government has decided to bid for four of them in Odisha and Chhattisgarh, one of them independently by SCCL and the rest as a joint venture between SCCL and Genco.

If the TS government bids go through, it will prove to be a huge advantage for the State for more than one reason: a) the coal mined there could be used to generate power which can be fed into the grid and picked up in Telangana; b) transmission of power is cheaper than transportation of coal ;and c) pollution effects of coal-based power generation could be avoided as far as Telangana is concerned.

Unlike in Telangana, where the overburden is high in almost all the open cast mines, coal is available almost on the surface in Odisha and Chhattisgarh which means a significant reduction in production cost.


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