§ Mr. David PorterTo ask the President of the Board of Trade what terms of reference have been given to the consultants appointed to assist in the coal review which he announced on 26 October.
§ Mr. HeseltineI announced on 26 October that it was my intention to appoint consultants to report on the prospects for British Coal, including any alternative markets that may exist for coal and to comment generally on the competitiveness of British Coal as an organisation.
Following evaluation of proposals from a number of companies invited to bid to undertake this work, CAminus Energy Ltd have been appointed to conduct a study of markets for coal, and Ernst and Young will be carrying out a study of the competitiveness of British Coal as an organisation.
Boyds have already begun work, starting their programme of pit visits on 5 February. Boyds will examine historical operating data, mine plans, coal reserves, and other relevant information supplied by British Coal Corporation to develop an independent assessment of the future production costs of each of the 21 pits at different potential levels of output, within the context of British Coal's operations.
Their conclusions will be based on an evaluation in respect of each mine of
- (i) the available coal reserve base,
- (ii) near-term capital requirements, and
- (iii) estimated future potential operating costs and likely costs under current mine plans.
Boyds will also provide general technical consultancy to the DTI as required, including technical evaluation of evidence provided during the review period as necessary.
Caminus will examine the short-term and longer term markets for coal in the United Kingdom and elsewhere. They will consider the market opportunities available to British Coal both at its current prices and at lower prices, if these could be achieved. in the context of future energy markets more widely and of the likely future availability of energy supplies. Caminus will also, on request by DTI, examine the prospects for alternative new electricity generation options identified in the course of the review.
Ernst and Young will consider British Coal's organisations and cost structure and advise on possible improvements to British Coal's competitiveness which could be achieved through changes in this area. They will not consider the technical aspects of British Coal's work, nor the competitiveness of individual pits.
In addition to these studies, PIMS Associates Ltd have been appointed to provide an overview of British Coal's cost structure and productivity in relation to international comparators.
The conclusions of each of these studies will be published. I expect the reports to be available early in 1993.
I may wish to commission other studies in due course.