Corporatise 7 Coal India subsidiaries as independent firms: NITI Aayog

NITI Aayog has batted for comprehensive reforms in allocating coal blocks on commercial lines

Estimating 100 per cent energy access by 2040 when independent India turns 100, government’s think tank NITI Aayog has enlisted several measures to achieve energy security with dynamic market for the same. It has also estimated that a record increase and dependence over renewable energy along with enhanced focus on energy efficiency would transform the Indian energy market.

In its Draft National Energy Policy, one of the major suggestions made is to corporatise the seven existing subsidiaries of the national miner Coal India Limited (CIL) to foster more competition and improve coal supply efficiencies.

“We must corporatise the seven subsidiaries of CIL into independent companies and allow them to compete against one another in an open coal market," said the report, and progressively fresh production from new mines ought to come from private sector.

NITI Aayog has hence batted for comprehensive reforms in allocating coal blocks on commercial lines to independent companies specialised in coal mining.

“These two steps will replace the current system of administrative allocation of coal by a vibrant coal market with prices performing the function of allocation. It will bring about substantial reduction in coal price and our coal industry will emerge as an exporter of coal,” said the draft policy.

While the Centre has been successful in auctioning coal mines to private companies for captive usage, commercial mining is yet to see the light of the day, mostly owning to subdued demand. In the past, similar suggestions have been shot down by the Centre citing efficient operations of Coal India and all its subsidiaries.

Another supply chain which the Aayog has recommended to separate the ownership of the power distribution companies from the respective state governments. “It needs to be ensured that that electricity distribution is subject to commercial pressure. This can be achieved by separating the distribution of electricity from ownership of the distribution grid. Discoms would continue to own the grid while actual distribution or sale of electricity would pass on to private agents,” said the report.

It said the move would help customers have the freedom to choose their electricity distributor from among various private agents and go for the one who offers the best deal. “Electricity distributors will thus compete for customers. Discoms will give open access to distributors to haul electricity on the grid for a charge,” it said.

A similar proposition in the name of ‘content-carriage separation’ has been made under the amendments sought in the Electricity Act. The amendments to the Act are yet to receive the nod of the Parliament.

The policy through its in-house tool – India Energy Security Scenario (IESS) has predicted that the energy mix of the country will undergo a transformation with preponderance of renewable technologies, storage solutions, smart grids and enlightened consumer behaviour becoming the order of the day.

“The total energy supply in the country is expected to go up by a multiple of around 3 times over 2012. This will translate into 1055-1184 kgoe per capita energy consumption, (it was 500 kgoe in 2012), including 2911-2924 kWh per capita electricity consumption (887 kWh in 2012),” it said.