Coal min to renew privatisation push

Identifies removal of entry barriers as priority.

At a time when severe environmental challenges are impeding the growth of the coal sector, the Union coal ministry has decided to renew a decade-old proposal of opening up the sector for private investors.

“Facilitating the removal of entry barriers in coal mining for opening up the sector” has been identified as a “high priority” area by Coal Minister Sriprakash Jaiswal, in the ministry’s latest “Strategic Plan” formulated for the next five years.

Coal is essential for meeting more than half of India’s commercial energy requirement.

Opening up coal mining to the private sector, along with setting up an independent coal regulator and other such proposals, is a part of the broader “blueprint” for reforms the United Progressive Alliance (UPA) government wants to bring in the coal sector.

A broader consensus on the move — aimed at bridging the rapidly expanding demand-supply gap of coal in the country by increasing production — was formed earlier in the UPA government for liberalising the sector. This, however, could not take shape owing to stiff opposition from the Left parties.

The move to allow private companies to mine will also help India to reduce its import dependence on coal. While the proposal has already been cleared by the Union Cabinet, a bill in this regard, introduced in the Rajya Sabha by the NDA government in 2000, is still pending. This time, however, the ministry seems to have adopted a determined approach for implementing the proposal. It is building what it is being called a “detailed implementation plan to pursue the clearance of Coal Mines (Nationalisation) Amendment Bill 2000 in Parliament”, including a quarterly review of the progress on the proposal at the joint secretary level.

“The ministry fully intends to push this subject. We will definitely like to do it as soon as possible. In fact, a separate Group of Ministers (GoM) has been set up to look into the matter which speaks of the government’s intention,” said a senior official from the coal ministry. The GoM was set up last year to deliberate on various aspects of the controversial proposal of opening up the sector. However, it has not met once so far.

While the ministry is confident of making a breakthrough this time, insiders believe that the path to privatisation in coal mining is still a distant dream. “Allowing private companies to mine coal is not going to be easy. There are major political repercussions associated with the move. The main reason why the government has not been able to do it is because it had Left parties’ support. Even now, with the support gone, there is strong opposition from the unions who think that the move would lead to privatisation of Coal India Ltd and the workers would lose jobs,” said a senior official close to the development. The CPI(M) had withdrawn support from the first UPA in July 2008 over the India-US nuclear deal issue.

The government had disinvested 10 per cent its equity in Coal India last year to raise Rs 15,000 crore as a part of its overall strategy to bridge the burgeoning fiscal deficit by selling stakes in major PSUs. The All India Coal Workers Federation and the Centre of Indian Trade Unions had gone on a three-day strike against the move in October before Coal India was listed in November.

A parliamentary standing committee had earlier recommended the government to have detailed discussions with stakeholders before making a final move. The coal ministry’s latest strategy paper, however, identifies the “opposition from various quarters to the opening up of coal sector to private investment for commercial mining” as a “threat that will impede speedier growth of the sector”.