The Centre has done well to politely but firmly convey to labour unions in Coal India Ltd (CIL) that there will be no rollback of the provision in the recently promulgated ordinance enabling limited private commercial mining. The ordinance, to start with, concerns itself with only coal blocks previously allocated for captive mining purposes that were cancelled by the Supreme Court last September. It is only these cancelled blocks that are now to be auctioned to bidders, including private companies. The successful bidders are, in turn, permitted to sell any surplus coal after meeting their own consumption requirements. But even such sales can only be made to CIL at its notified price for that specified grade of coal. This hardly amounts to commercial mining, let alone denationalisation of the coal sector, as alleged by CIL unions.
Having convinced the unions to call off their strike — and ensuring that auctions of the de-allocated coal blocks go ahead — the Centre needs to take decisive steps to allow full-fledged commercial mining. This can happen only by amending the Coal Mines Nationalisation Act of 1973, which permits only CIL and other state-owned companies to excavate coal for sale to end-users. The ordinance is, at best, an incremental reform. A power plant can now mine coal for its own use and sell any surplus quantity to others. Power producers or steelmakers aren’t really equipped to undertake mining, which is a specialised job. What India needs are specialist commercial miners capable of deploying state-of-the-art technology that can extract the maximum coal from a given area at the least cost and causing minimal environmental damage. CIL’s record hasn’t been the best here, proof of which is in the fact that a mere 37 million out of its total 462 million tonne coal output in 2013-14 came from underground mines.
It may be politically sensible for the Centre to assure the CIL unions that it has no intention of privatising the state-owned miner. Indeed, there is nothing wrong in the government continuing to be a dominant owner in natural resource or energy companies — be it CIL or NTPC — so long as these are professionally managed and insulated from political/ bureaucratic interference. But the days of state monopolies are over. Opening up commercial coal mining to private players will force CIL to be more efficient and competitive, which is good for its employees as well.