Coal India has pushed the responsibility of scouting for private sector partners for its coal blocks to a government appointed committee of secretaries. The 17-member board of the company will instead depend on this inter-ministerial group to decide the selection of coal blocks and bidders from the private sector.
The decision to abdicate responsibility is significant as the blocks are owned by Coal India and the scale of investment in all cases is lower than the investment limit of Rs 5,000 crore that the board of companies like CIL can approve. Significantly,none of the board members were on the inter-ministerial group till chairman S Narsing Rao was admitted by the group as a co-opted member at its last meeting.
The committee of secretaries in addition to these decisions will also decide whether CIL needs to hive off a subsidiary for the purpose.
The CIL board includes six IAS officers,including Rao. The two serving ones are the additional secretary and the joint secretary in the ministry of coal.
The company with a 10 per cent public shareholding signed a MoU with the ministry of coal in April this year to push up its offtake to 474.70 million tonnes in this fiscal.
The company has identified 116 coal blocks some of which the private sector companies can investor in. The secretaries group has asked CIL chairman to make a presentation that will include details of the proposed contracts to be drawn up with the private sector entities,and on how the plan can be executed by his board including the nature of contracts.
The mines and coal would remain with the company but the actual mining activity would be undertaken by the concessionaire. In this public-private partnership (PUP) model,the bids would be based either as auction of mining charges or as pre-set prices which need to be matched by bidders. The backdrop of the plan stems from the perception that Coal India Limited will not be able to mine coal from all the blocks within its fold to meet the growing demand.
The plan to rope in private partners for CIL is not new. Planning Commission deputy chairman Montek Singh Ahluwalia has written to coal minister Sriprakash Jaiswal to enlist private mine developers through the PUP route. He and others have argued that CIL is unable to make the investment needed to fuel the sustained rise in demand for coal.
At present,CIL has outsourced operations in six of its projects. Actually this is a good concept and we fully back it. We are in the process of evolving a revenue model for the operators which will entail paying them through pre-determined costs. It helps us as they are expected to shoulder the nitty-gritty in their project areas. We will assist them on a need basis on building the evacuation infrastructure, CIL chairman S Narsing Rao told the Indian Express. The coal ministry official said out of the 1,200 mcm of coal resources,550 mcm is envisaged through outsourcing.