What is pushing the coal transportation costs in Chhattisgarh and Punjab

The case of the rising costs incurred on the transportation of coal from mines to consuming units in Chhattisgarh and Punjab is getting curiouser. The cost of transporting the black fuel in both states has been tweaked to make it dearer for bulk consumers. While in the case of Chhattisgarh, this is courtesy the state government, and for Punjab, it’s Centre.

The issue garnered attention recently because of Chhattisgarh. Last Monday (February 20), the Enforcement Directorate (ED) swooped down on the provincial satraps of the ruling Congress party in the state at daybreak and woke up about half a dozen from their sleep.

Soon, Congress cried foul in Delhi and Raipur, Chhattisgarh’s capital. This was particularly worrisome for the party because its 85th plenary session was scheduled to begin within days of the surprise raid by the ED against some of the persons who could well be hosts to the party’s show at Raipur.

‘Illegal levy of Rs 25 a tonne on coal’

At the root of ED action in Raipur and Bhilai is the alleged ‘illegal levy of Rs 25 a tonne on coal’. This is claimed to be collected from consuming companies through agents or middlemen who are suspected to be in cahoots with politicians and bureaucrats either belonging to or close to the ruling party of the state.

Also read: In diatribe against Adani, why Cong is on a sticky wicket in Rajasthan, Chhattisgarh

The proceeds thus collected over the years is claimed to be running into hundreds of crores of rupees though the state government and Congress Chief Minister Bhupesh Baghel have denied this. Yet, a few bureaucrats were arrested by the ED in the case earlier. Last December, a Deputy Secretary-level officer posted in the CM secretariat was taken into custody. Eight other persons were also picked up by ED in the same case.

But so far none of the arrested persons had direct political links though now the ED suspects the proceeds of the collection to have changed hands with state’s political or Congress bosses. Those raided on February 20 include Chhattisgarh Congress treasurer Ramgopal Agrawal, party MLA Devendra Yadav, chairman of building workers’ welfare board Sushil Sunny Agrawal and state Congress spokesperson RP Singh. Over a dozen premises belonging to the alleged suspects were raided in the latest move by the ED.

Congress called the raids a vendetta and third-rate politics. Jairam Ramesh, party general secretary who looks after communications, remarked in Delhi that the ED stood for “exterminating democracy”.

Similarly, in Raipur, Baghel called the raids as “politically motivated” and an attempt by the Central government to deflect the attention from Gautam Adani whose companies have come under sharp scrutiny after American short-seller Hindenburg brought out a report to point out the conglomerate’s several misdemeanours.

Longer route to procure coal includes Adani ports

Exactly a week before the ED raids in Chhattisgarh, Congress MP and former Union Minister Manish Tewari took to the floor of Parliament to accuse the Centre of discriminating against the people of Punjab to benefit the Adani Group. Tewari said that the Punjab government was ordered by the Centre to procure coal through a longer route that included the ports operated by Adani. This could make coal used by thermal power plants in Punjab costlier and, in turn, take the power tariff in the state up, said the Anandpur Sahib MP in the Lok Sabha on February 13. Punjab sources its coal from Mahanadi Coalfields in Odisha.

“If that coal is brought directly to Punjab via railroad, the distance that it has to travel is 1,830 km. The Union Power Ministry wrote a letter to the Punjab government on November 30, 2022, and said that it cannot get the coal directly via rail road and will have to take the coal to Paradip port, then take the water route passing by Sri Lanka and reach the Adani ports in Dahej and Mundra, and then take the coal 1,500 km via rail road to Punjab,” Tewari said.

Tewari claimed that because of this, the cost of coal transportation went up from Rs 4,350 per tonne to Rs 6,750 per tonne and the cost of 1 KW power rose from Rs 3.6 to Rs 5. Thus, he tried to impress upon the Centre to take back its directive and permit the coal to be procured from the Mahanadi Coalfields directly by the rail route.

The idea behind the move of the Power Ministry to change the mode and route of coal procurement for Punjab State Power Corporation Limited (PSPCL) is to discourage and, thereby, reduce the use of imported coal for blending by thermal power plants. The November 30, 2022 order, issued by Joint Secretary in the Ministry of Power, Piyush Singh (IAS), says, “On careful analysis, it was found that the transport of domestic coal using the RSR [Rail-Ship-Rail] mode, though costlier than ARR [All Rail Route] mode, is cheaper than importing coal.”

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The Ministry order warns against “slackness” in using the new mode for coal transport by saying in its order, “Central and State Gencos [or power generation companies] were also advised to plan to cover 15-20% of their domestic coal requirements using RSR mode. Further it was informed that any slackness in implementing this plan would result in regulation of ARR/RSR [rail] rakes by Sub-Group subsequently. Accordingly, PSPCL is requested to take necessary action to start lifting domestic coal using RSR mode with at least 1-2 rakes per day from January 2023 onwards.”

Meanwhile, All India Power Engineers’ Federation (AIPEF) spokesperson V K Gupta said that it was in view of a likely coal shortage in summer that the Centre decided to blend Indian coal with imported coal by 6 per cent (by weight) and use the RSR mode for transporting coal from Mahanadi and Talcher coalfields in Odisha to Punjab via Mundra in Gujarat.

Cost many times higher in Punjab than in Chhattisgarh

The bottom line is that the cost of coal has been going up in Punjab as well as in Chhattisgarh. While it is the Centre that is to be blamed for pushing the cost in Punjab, it is the state government that has reportedly been charging a rather controversial levy on coal in Chhattisgarh. However, the cost of coal transportation is now many times higher in Punjab than in Chhattisgarh.

Amid this, a political slugfest has begun over the Adani-Hindenburg saga, with Congress blaming the top BJP leadership for Chhattisgarh ED raids and terming it as a ploy to steer attention away from Adani.

The battle thus set off has all the chances to escalate further during the three-day Congress jamboree that got underway in Chhattisgarh on Friday (February 24), drawing no less than 15,000 delegates and invitees from all over the country. Among them are many from the virtual rank and file of the grand old party.