Tread with care

The Centre last month decided to open the coal sector to private participation — both domestic and foreign players — ending a 45-year monopoly on coal that Coal India Ltd (CIL) and its subsidiaries had enjoyed. Following the nationalisation of coal in 1973, only the state-owned CIL was allowed to mine and sell coal. The state-owned entity currently accounts for more than 80 per cent of domestic coal output. The Supreme Court had in September 2014 cancelled allocation of 204 coal mines to different government and private companies made since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973. India has the third-largest coal deposit in the world with Orissa and Jharkhand alone accounting for nearly 65 per cent of the deposits. Orissa and Jharkhand respectively have 24.58 per cent and 29.29 per cent of the total coal deposits. More than 66 per cent of the country’s electricity is generated from it. The criticality of the fossil fuel to the country’s economy cannot be overemphasised. The sector has been ridden with a raft of inefficiencies. It continues to be plagued by crises when coal stocks with power plants almost run out. Reports on coal guzzlers such as NTPC and NALCO — two entities having large-scale operations in Orissa —shutting their operations fully or partly because of short supply of coal are many. Undersupply of coal has pulled the plug on many companies in the infrastructure sector — such as steel, cement and power units — forcing them to either shut plants or underutilise their installations. Fixing this anomaly was long overdue. Earlier reforms had at best allowed private players, especially in power, cement, steel and aluminum sectors to mine coal. But that was only for captive use. Now that the government has gone the whole hog and allowed private players to mine coal without any end-use curbs or price caps, it is significant. It is expected that investments will now flow into this sector and, along with it, modern technology and global manufacturing. The move is set to usher in competition in coal supply, to reduce coal imports and to help stressed power plants to attempt a turnaround through better fuel management in coal supply. Post this reform, CIL will be forced to shed complacency and perform better. Considering that the bulk of fossil deposits in the country is concentrated in eastern India, the government should ensure that revenue from private commercial mining is used to help develop backward areas, especially in the eastern part of the country. But will throwing the coal sector open to private players be the panacea for the ills facing the coal sector? Will it not engender corruption and under-reporting of output? The sector is riddled with too many bottlenecks, such as evacuation of coal from the pithead to the end users, displacement of people and rehabilitation problems, environmental issues and regulatory bottlenecks. The lack of rail links to mines, and, where such links exist, inadequate availability of railway rakes, cause enormous disruptions in supply. The Centre should address these bottlenecks on a war footing. Most importantly, inasmuch as the fossil fuel is a limited national resource, the government must tread with care and take utmost care while parcelling away blocks among private players. The whole process needs to be executed in a transparent and people-centric way. Rehabilitation of people who will be displaced by the private companies must be given top priority. As the move is likely to open direct and indirect employment in coal-bearing states such as Orissa, locals should be given priority in jobs and efforts must be made to ensure economic development of the regions.

No views yet

recommend to friends
  • gplus
  • pinterest
  • whatsapp

Recent articles


Leave a Reply

Your email address will not be published. Required fields are marked *