Open up coal mining

Genuine competition needed on the path to self-sufficiency

Two years ago, the government had announced that India does not need any imported coal and instructed states as well as NTPC to stop imports. However, the latest figures given by the government to the Rajya Sabha show that coal imports have grown 15 per cent in the first seven months of the current fiscal year. Reports show that states such as Tamil Nadu, Karnataka, Maharashtra and Gujarat, along with NTPC and some private units in Punjab and Madhya Pradesh, have issued tenders totalling 12.5 million tonnes. This has happened because India’s domestic output has not been able to keep up with the country’s demand, which grew at 7.6 per cent during April-September — the highest in the past five years. With the Lok Sabha elections just months away, the power demand is set to rise further. But the shortage of coal is just a symptom of a deeper problem. 

Almost 95 per cent of India’s coal mining output is by the public sector, within which Coal India Ltd (CIL) is the behemoth, accounting for four-fifths of India’s production. CIL may be the world’s largest coal producer, but its monopoly status has yielded little in terms of improved production techniques, superior quality of output, or, for that matter, a less dirty environmental footprint. Almost a year has passed since the coal sector was opened up for private players, but most are mired in the maze of clearances and permissions. The truth is, even as India ramps up its renewable energy sector, coal-based thermal power will continue to be a major component of its energy portfolio for decades to come. Improved coal mining and processing technologies are therefore critical for both production and the environment. Whether it is more efficient and safer mining technologies, pit-head dust mitigation, coal washing, regeneration of forests, or restoration of open-pit mines, Indian coal mining has been consistently lacking.

Enabling greater investment in coal mining has, therefore, become more critical from all perspectives, be it safety, production or ecology. Globally, mining practices have changed dramatically with significantly greater capital intensity than is the current norm in India. As India’s recent experience with private sector coal mining indicates, simply allowing some private companies entry is not good enough. The future of coal mining in India requires a shift towards improved regulation monitoring and enforcement. Coal miners, including those in the public sector, need to be held directly responsible for safer and more humane mining practices, state-of-the-art environmental practices while ensuring improved efficiency in mining this non-renewable resource. It is evident that CIL by itself will not be able to achieve these objectives. The solution, therefore, is a greater role of the private sector, including global players. Since most of the important mines are already locked in the public sector, it is time to break up Coal India into smaller entities and privatise them. This will result in greater competition, investment and improved mining efficiencies as well as better safety. As the government would no longer be an owner but overseer of coal mining, it would be better able to demand improved environmental and safety practices.