Denationalise coal, now

Cancel all licences. They have been doled out in a system that promotes crony capitalism and is anti-business

The prime minister has disputed the loss as computed by the Comptroller and Auditor General of India on coal mine allocations.

I agree that the CAG figures are wrong. I believe that the gain for private parties or political cronies is not Rs 1,86,000 crore, but Rs 5.1 lakh crore. I give below a detailed cost analysis to prove my hypothesis.

The production cost of open pit mining or open cast mining is about Rs 600 per tonne, including state royalty. To improve its calorific value, the coal must be washed and there is an inbuilt element of wastage. If you add Rs 100 for washing, and another Rs 100 for wastage, you would arrive at a figure of about Rs 800 per tonne. With underground mines, the cost of mining is Rs 1,100-1,150 per tonne, including royalty. With washing and wastage, this figure goes up to Rs 1,350. Since 80 per cent of the coal in India is mined underground, the average cost of production works out to about Rs 1,250 per tonne.

At the last e-auction by Coal India Limited, the rate, ex-mine, of Central Coalfields was Rs 3,427 per tonne (40 per cent calorific value). For Western Coalfields, it was Rs 5,693 (42 per cent calorific value). The cost of imported coal varies from Rs 4,500 to Rs 6,400, landed, depending on where you are sourcing it from and its quality. So the average cost of imported coal is Rs 5,000-Rs 5,200. Since its calorific content is higher (50 per cent calorific value), you reduce the price by 20 per cent to bring it at par with the calorific value of Indian coal, and the figure would be about Rs 4,200 per tonne.

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