Saturday, Nov 29, 2014

Coal, power can avoid mutually destructive battles

In the past, conflicts have occurred between the power and coal ministries. In the past, conflicts have occurred between the power and coal ministries.
ENS Economic Bureau | New Delhi | Posted: May 27, 2014 12:51 am | Updated: May 27, 2014 9:45 am

The Narendra Modi government’s decision to merge coal and power and non-conventional ministries will ensure there is no repetition of repeated Presidential Directives being issued and violated, throwing the coal companies, power plants and the shareholders into a mutually destructive battle that happened through 2012 to 2014.

Merging coal and power ministries will ensure that both move to solve the biggest energy problem in the Indian economy. The coal and power ministries would not throw the rule book at each other while holding onto their positions on captive mines or issues like providing linkages for plants. As a result of the differences and much besides the coal ministry is battling charges of favouritism in allocation of mines and stagnant production levels while most of the power distribution companies are plagued by huge losses.

There are at least six committees in the coal ministry to examine each decision which delays even simple decisions. Merging these ministries would do away with the need to have these committees and make it manageable for the merged entity to expedite linkage allocations and effectively monitor coal production plans. However, the efficacy of this mechanism could still be doubtful if the union environment ministry would retain a say in clearing investment plans. For instance 13,000 hectares of coal-bearing land is still awaiting green clearances as per government data.

At a time when the government is all set to commence competitive bidding for coal blocks, the proposed merger would hopefully cut down the delays in decision-making process as they would function under a common umbrella.

At the time of going to press it was expected that the petroleum ministry too would become a part of this proposed mechanism, but the Modi administration is likely to keep it out this proposed ministerial merger. The necessity of merging petroleum ministry with this set up was felt due to overlapping inter-ministerial jurisdictions in exploring coal bed methane. Besides depleting output from the KG D-6 basin had been impacting gas-based electricity production.

Justifying the merger of ministries for enhancing energy security, former chairman of Coal India, Partha S Bhattacharyya, said, “Merging ministries is a step in the right direction which would match with the NDA government’s motto of minimum government and maximum governance. It would also lead to empowerment of the ministries and ensure getting results at a faster pace.”

We are told that China disbanded 11 ministries in 2003 and brought leading state-run enterprises under the administrative control of an apex body which has resulted in increasing their profits by as much as three times besides improving their topline, he added.

Another proposal on the NDA government table is to merge steel and mines ministries as iron ore, bauxite and coking coal are considered to be essential ingredients in manufacturing steel, aluminium and cement.

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