Strikes and shortages

Coal India needs competition the country needs diversity of supply

The worst of the coal crisis may be over, and the country may be able to avoid the power crisis that had seemed imminent as coal stocks with power stations ran down to critically low levels. This is because Coal India, which supplies the bulk of the coal that feeds power stations, has managed to ramp up supplies from 0.6 million tonnes a day to nearly a million tonnes; the usual level is 0.9 million tonnes. The Railways has helped by providing more wagons than usual. Coal supplies had been hit over several weeks because of the flooding of coal mines following heavy rains in parts of the country, the disruptions caused by the Telangana agitation, and a one-day strike by workers last week, supporting their demand for a higher bonus. Coal stocks at some power stations had dropped to a couple of days’ supply, bringing back memories of the periodic supply crises that used to erupt in the seventies and eighties. If the worst of the latest crisis can be said to be over, attention should focus on two issues: the factors causing industrial unrest and, as a matter of energy security, the need to reduce dependence on a single monopoly producer of a critical energy input.

The Coal India management has a point when it resists the demand for a 55-per cent increase in bonus to workers, from Rs 15,000 last year — which in turn had been a 50-per cent increase on the year before. Production has been virtually stagnant, and in recent months has trailed targets, so it cannot be argued that productivity has improved. In such a context, the management’s offer of Rs 17,000 as bonus this year is eminently fair. What is less defensible is the delay in starting fresh wage negotiations, with a general wage review having become due a couple of months ago. The workers’ unions had in fact served a strike notice in July, but were persuaded to withdraw it. If the wage issue is resolved, the bonus issue will fade into the background. Meanwhile, the officers’ agitation has begun stirring the pot by also threatening to go on strike, demanding higher productivity-linked bonus. This is indefensible because officers are not supposed to indulge in unionised behaviour, and those organising such a strike should be dealt with firmly.

The broader issue of ensuring diversified sources of coal supply needs to be addressed. While coal imports have increased sharply over the years, and captive mines are operated by some power generating companies, more than 80 per cent of coal supplies continue to come from Coal India. This excessive dependence on a single source is innately risky and can come down only if Coal India is broken up into different companies, and private sector competition is allowed. The government may find it difficult to do this, since it is likely to face opposition from at least one of its coalition constituents. The alternative, however, will be continued under-performance — it is worth noting that the price of Coal India’s stock (listed exactly a year ago) has dropped by nearly a quarter in the last few months.