The mammoth task of restructuring Coal India has to be done on a war footing, starting with making its subsidiaries totally independent profit centres
The new government takes over official control after the swearing in ceremony on 26th May, when the portfolios will be announced and new Ministers take over control of their new ministries and responsibilities. If press reports are to be believed, there are very good chances that many of the ministries may be amalgamated into a single large unit to cover major areas. For instance, it is believed that a Ministry of Power may be established that would take care of power generation in any form, though, it is likely to have sub-divisional heads to control, guide and operate the
One of the important issues that is likely to be taken on hand relates to whether Coal India Ltd (CIL), the world's largest coal miner, be allowed to run the way it has been for so many years now, or should it be restructured, in order to ensure greater domestic production and reduced dependence on imports of coal.
Coal India, as the largest coal miner in the world, accounts for meeting 80% of India's needs. As a Holding company, it controls the following companies:
1. Eastern Coalfields Ltd (ECL) - Sanctoria, West Bengal
2. Bharat Coaking Coal Ltd (BCCL), Dhanbad, Jharkhand
3. Central Coalfields Ltd (CCL), Ranchi, Jharkhand
4. South Eastern Coalfields Ltd (SECL), Bilaspur, Chhatisgarh
5. Western Coalfields Ltd (WCL), Nagpur, Maharashtra
6. Northern Coalfields Ltd (NCL) Singrauli, Madhya Pradesh
7. Mahanadhi Coalfields Ltd (MCL), Sambalpur, Odisha
It may be noted that Coal India has interest in Coal India Africana Limitada, in Mozambique. Coal India's consultancy is done by Central Mining Planning and Design Institute Ltd (CMPDI), Ranchi, Jharkhand.
Coal India's Chairman and Managing Director (CMD), S Narasing Rao, IAS, will soon relinquish his position and move on to Andhra to be the chief secretary of the chief minister there. So, with his going away to a new posting, all the experience and knowledge that he gained in the coal industry will be lost and the new government will now have to nominate the new CMD to take over the job, and, unless he has sufficient background knowledge in the coal mining industry, he will have to start all over again to acquire the same.
During his tenor, although CIL faced and continues to face a lot of difficulties, in terms of land aquisition issues, inadequate supply of racks, evacuation problems from pitheads, environmental clearances, politically motivated agitations besides red tape, Coal India managed to produce some 452 million tonnes. During this period, production was also lost due to cyclone Phalin and flooding in the monsoon period. Work on the dedicated corridors are moving at a slow space and due to government intervention, Narasing Rao had to sign 172 FSAs (Fuel Supply Agreements) for ensuring coal supplies for power generators to produce 78,000 MW, though coal production was falling behind targets!
It may be noted that our mines still are not modern, like their overseas counterparts, with latest mining equipment and technology. In the meantime, our ambitious plans need coal supply of 530 million tonnes in 2014-15, 575 million tonnes in 2015-16 and 615 mt in 2016-17. We do not, unfortunately, have the capacity to reach these figures unless radical changes are made in the organisation and its approach to the various problems that confront its it, and act as stumbling blocks, details of which have been stated as above.
The mammoth task of restructuring Coal India has to be done on war footing. First, and foremost, is that the seven coal mining units, mentioned above, need to be made as totally independent profit and production supply centres, run by technocrats who have years of experience in the coal mining industry.
Among the magnificent seven mentioned above, two units, namely, South Eastern Coalfields Ltd and Mahanadhi Coalfileds Ltd, are mining annually over 100 million tonnes each, joining a few others in the same league overseas. If they can maintain this tempo and production, there must be some serious flaw in our other five units which may be due to the various causes mentioned above. These obstacles have to be surmounted at all costs, and the government must ensure that the posts of CMDs are not for those not qualified to run such establishments.
The new government has also indicated that they are not averse to foreign direct investment (FDI) in the industry. Why not selectively get in touch with the top miners in the world and invite them to invest in the country? They may be permitted to import the latest machinery and technology that goes with it but ensure increased production of much needed coal.
Coal India has cash reserves of over Rs60,000 crore. As the first step in the restructuring of the organisation, they need to reduce the government holding to 26% and pay off from the cash reserves. Next, would be to spin off all these seven companies into totally independent entities, by awarding to the existing shareholders of Coal India. Those coal blocks, which were taken back may now be auctioned through open tendering process, in line with same procedure adopted for oil and gas blocks that have been successful so far. Captive blocks given by the government to power generators must now have a time frame to perform, and this may call for a total elimination of the MOEF in the current form, and replace it by a more practical ministry that may be directly controlled by the concerned State Government, to whom a clear cut term of reference be given along with national guidelines.
This is not a small task to achieve, but steps can be taken by the new government in these directions, taking into account what a Core Advisory Committee (CAC) to the Prime Minister can do on such matters of national importance.
has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)