UK faces pressure to end miners’ coal deal

Date: 15/07/1999

By Tim Jones

THE European Commission is putting pressure on the UK government to dismantle a 120-million-euro-per-year 'sweetheart' deal under which retired miners and their widows receive cut-price coal.

The intervention of the Commission, which believes the 'concessionary fuel' arrangement breaks EU rules for the awarding of public sector contracts, will embarrass the UK's Labour administration.

Energy Minister John Battle has given high-profile support to domestic operator RJB Mining in its legal attempt to overturn a Commission decision allowing 5.3 billion euro in German coal industry aid.

However, sources say the Commission's Directorate-General for the internal market (DGXV) has signalled to the UK's industry ministry that procurement arrangements set up in the wake of British Coal's privatisation four years ago violate the 1993 public supply contracts directive.

Under a deal with the once-powerful National Union of Mineworkers, 170,000 retired miners receive an annual fuel allowance of up to five tonnes of coal or specified smokeless fuel brands.

As a result, two-year supply and distribution contracts were struck with Coal Products Distribution Ltd (CPL) in England and Wales and Fergusson in Scotland which expire next year.

In December 1997, Battle acted on legal advice that these procedures - by specifying tonnages of particular brands - broke EU law. But he swiftly backed down under pressure from the NUM, CPL and Labour MPs from coalmining areas who claimed changes would cut miners' fuel entitlement and force them to accept lower-quality brands.

DGXV, which is due to be come under the control of ardent free-marketeer Frits Bolkestein in September, had held back from declaring its opinion on the concessionary fuel regime while it was such a hot potato in the UK.

However, it has now given tentative support to Battle's original shelved plan which specified the types of fuel to be supplied to beneficiaries rather than brand names.

Under the Commission-sanctioned plan, beneficiaries could switch to 'broadly equivalent fuels'.

CPL disputes suggestions that current tendering procedures break Union law. It stands to lose a multi-million-euro guaranteed market if new open tenders for concessionary fuel are drawn up.

Peter Lees, marketing chief of smokeless fuel- maker Aimcor said: "We could do with some of this business and, while the reality is that CPL would maintain the majority of the business, it could force them to cut their prices."