CALLING it the “most ambitious coal sector reform since its nationalisation in 1973”, the Centre last February had announced that private companies would be permitted to mine coal for commercial sale. This month, the Coal Ministry is set to put that initiative on hold under pressure from trade unions of state-run coal companies.
“There are issues of resistance by Coal India Ltd/its subsidiaries unions against commercial mining which does not make it conducive at present for the auction of coal mines for sale of coal,” says the proposal from the Coal Ministry for the approval of the Committee of Secretaries.
Coal India Ltd and its subsidiaries account for more than 80 per cent of domestic coal output and employed 2.50 lakh workers and 30,798 supervisors as of April 2018.
Due to their bargaining power, the auction process could not begin even for the initially identified nine mines although private mining for commercial sale was announced on February 20.
“No coal mine has been auctioned so far under this methodology,” the Ministry has admitted.
The Coal Ministry’s proposal, effectively, rejects a High Power Expert Committee’s (HPEC) recommendation last July that all mines and blocks — including coking coal and smaller ones — be auctioned for sale of coal or commercial mining except those already specified for end-use and those in Schedule II and III of the Coal Mines (Special Provisions) Act.
Schedule II are producing mines, while Schedule III mines are ready-to-produce blocks.
Playing it safe, the Coal Ministry’s stand is to continue with the auction of 19 mines to private firms — 13 mines for non-regulated sector (cement, iron & steel and captive power) and six mines exclusively for iron and steel that are already identified.
It plans to stay on course for allotment of nine mines to state-run public sector undertakings with seven identified for end-use power and two for sale of coal in open market.
All these would be done under the current methodology with minor changes in the bidding system, it said.
So far, four tranches of auction have been conducted for specified end-users such as power and non-regulated sectors with the fifth one exclusively for the iron and steel sector.
However, these, too, have not had much success after the initial first two rounds. “..After significant success of Tranche 1 and 2 of coal mines auction, the interest of the bidders in Tranche 3, 4 and 5 have been dismal so much so that Trache 4 and 5 had to be cancelled owing to insufficient number of bidders,” says the Coal Ministry’s proposal.
Following directions by Prime Minister at a meeting last November, the HPEC was formed under the chairmanship of former CVC Pratyush Sinha to “examine efficacy and challenges in the current bidding system and suggest changes for conducting auction of coal mines in future”.