New Delhi, Dec 24: A government sponsored review committee on regulatory framework in coal industry has recommended privatisation of Coal India Ltd (CIL) as a part of reforms in the crucial mining sector.The report is part of the structural reform package of the coal sector rehabilitation project (CSRP) undertaken by the government and the World Bank.The report has been prepared by Tata Energy Research Institute (TERI) and International Mining Consultants (IMC) of United Kingdom for the government.In order to encourage the development of commercial practices in the coal companies, the report has recommended the establishment of an `arms length' relationship between the Department of coal (DoC) and the operating companies.It further added that the establishment of this relationship would in turn encourage the formulation and implementation of sectoral policies which are separate from those of the existing operators.The report has criticised the nature of the relationship between the DoC and CIL stating that the former had become part of CIL management which was both undesirable and unnecessary. CIL currently has eight subsidiaries in its fold including some loss making ones like Eastern Coal Fields(ECL) and Bharat Coking Coal Ltd (BCCL).The report mooted the idea of setting up state level companies on the lines of Singraeni Collieries Company Ltd (SCCL), a 51:49 joint venture between the Andhra government and the Centre, as an alternative to the present setup.It also recommended the establishment of individual subsidaries outside the CIL holding strucuture but within the public sector domain.The controversial issue of closure of uneconomic mines has been emphasised with the report warning that mine closure should not run together as it would have devastating consequences for the respective communities and regions.The current procedure and policy for identifying and releasing coal blocks for private sector projects has been criticised as being flawed and detrimental to the entry of new operators on a large scale.The report also added that CIL should not be involved in the process of alloting blocks.On the issue of use of private contractors for carrying out mining operations, the report called for an immediate withdrawal of the government notification under the Contract Labour Act relating to the coal sector. It said that private contracting operations in the sector had the potential to bring about early and substantial benefits to the industry.The report has pointed out that economic issues would continue to heavily influence the shape and extent of private sector participation and therefore needed to be taken into account at the time of reforms.The CSRP was 1.7 billion dollar project with contributions from WB and Japanese EXIM bank to the tune of one billion dollars while the rest came from CIL.
