After 2 years, GoM wakes up to discuss opening up mining

(Source: Indian Express by Amitav Ranjan Posted online: Thu Jul 14 2011, 02:12 hrs)
New Delhi : The UPA government has suddenly revived a two-year old proposal to open up coal mining for commercial sale. A Group of Ministers under Finance Minister Pranab Mukherjee, constituted almost two years back on August 26, 2009, is scheduled to meet for the first time to consider re-introduction of a bill to amend the Coal Mines (Nationalisation) Act, 1973 that will allow private Indian companies extract coal for commercial sale.
The GoM meeting has been convened in short notice with the Coal Ministry drafting a proposal on Tuesday and circulating it today for vetting by other ministries. Given the large demand-supply gap that will only widen over the next five years, India will have to import over 100 million tonnes of coal each year — a step that will skew international prices, it has pointed out in its proposal.

According to the Planning Commission, that is servicing the GoM, coal demand for 2011-12, the terminal year of the 11th Plan, stood at 696 MT implying a compounded annual growth rate of 8.9 per cent.

As against this, production for this fiscal is pegged at 554 MT. To bridge the divide, the fuel’s end users have been resorting to imports, which surged from 49 MT on 2007-08 to 95 MT in 2010-11. The Plan panel has noted that coal imports could shoot up to 114 MT in 2011-12, although a lot would depend on the status of existing linkages.

If coal mines were to be denationalised, private investments would augment domestic supply as well as galvanise state-run coal companies to perform better, the ministry said.

It, however, warned that with trade unions opposing the move, the re-introduction of the Bill could result in strikes that could hamper other sectors such as power and steel. It has, therefore, left it for the GoM to provide directions if the amended Bill should be introduced in the coming session of Parliament.

At present, only public sector companies can mine coal for open market sale while private companies engaged in power generation and iron and steel production are allotted coal blocks only for captive use.

There have been numerous attempts since 1997 but an amendment could be introduced in the Rajya Sabha only in April 2000.

But this was stalled with trade unions demanding its withdrawal though the Standing Committee on Energy supported the move in 2001.

The proposal came up again in the Cabinet Committee on Infrastructure during the UPA regime but given strong opposition by trade unions, Prime Minister Manmohan Singh referred the issue to GoM for arriving at “a consensus”.