Allegations of an unofficial coal levy being extracted from miners by a cabal of middlemen, state officials and politicians in Chhattisgarh reflect the shortage that afflicts the coal economy again. Though such “levies” cannot be condoned, they recur when policy makers walk back market-friendly reforms such as cutting the volume of coal sold via e-auctions and micro-managing demand and supply.
That there is a coal shortage is clear from a Ministry of Power order last week invoking Section 11 of the Electricity Act to order power plants that use imported coal to generate electricity at full capacity. This section was invoked for the first time last year and has been deployed again as the hot weather sets in. Since last year, off and on, the coal economy has begun to face a demand-supply asymmetry.
This situation is a contrast to expectations that coal shortages would disappear with the first set of auctions for mining blocks in 2015.
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