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Coal Industry

Volume 226: debated on Wednesday 16 June 1993

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To ask the President of the Board of Trade if he will make a statement regarding developments in the Government's policies relating to the coal industry since publication of the White Paper on coal.

Subsidy. The Government indicated in the White Paper "The Prospects for Coal" that it was willing to offer financial support to both British Coal and private sector coal producers who could secure a genuinely additional market for United Kingdom underground coal for electricity generation at world-related prices where this was consistent with the relevant European Community provisions.Evidence received by the coal review, and the separate review conducted by the Trade and Industry Select Committee, argued that there was potential for an additional market for coal for electricity generation, and that a subsidy related to the difference between world-related prices and production costs could offer the United Kingdom coal industry the chance to secure that market.The Government have offered to enable the industry to explore this opportunity by being prepared to offer such a subsidy. It is now up to the United Kingdom coal industry to demonstrate that it can achieve additional sales.We invite underground coal producers, and prospective coal producers who are seeking licences for closing British Coal pits, to provide us with firm evidence of the additional sales for electricity generation they believe they can secure, and the amount of subsidy they require. This should be backed by supporting information including a comparison of the proposed price with world market prices, expected production costs etc. Once we have had time to assess the information provided we shall make a further announcement on arrangements for the subsidy.

Generators' Coal Stocks

The Government have issued directions under section 34 of the Electricity Act 1989 to National Power and PowerGen, requiring them to hold stocks of coal at power stations sufficient to enable normal electricity supplies to be maintained for a period of nine months in the event of a complete interruption of supplies from British Coal. In 1992–93 the stock levels required varied from some 10 million to 20 million tonnes depending on the time of year. The stocks held by the two electricity generators at the end of May 1993 stood at approximately 31 million tonnes.

The Government are reviewing the required stocking level for 1993–94 and subsequent years with the electricity generators.