The power cuts in many parts of the country during this summer have once again brought to the fore the need to urgently increase the production of coal that generates more than half of India's power generation. State-run Coal India accounts nearly four-fifth of the country's total output, but the company has been falling short of its targets for the past few years.
Despite sitting on its fifth-biggest reserves of coal, India has become the world's third-largest importer of the commodity. Outlining the government's priorities in his inaugural address to both houses of Parliament, President Pranab Mukherjee said reforms in the coal sector are on the top of the agenda.
Partha Bhattacharya, former chairman of Coal India, says the government should open up the coal sector to attract players for bringing in specialised mining skills. "The coal sector has to be opened up. You need to have fresh players. The country needs half a dozen Coal Indias to meet its requirement. There will be an atmosphere of competition and coal production will go up," said Mr Bhattacharya, who is now an executive director of Deepak Fertilisers. (Watch video)
It is time to pass the bill that was introduced by the NDA government in 2000 to repeal the Coal Mines Nationalisation Act, the former Coal India chief said.
Mr Bhattacharya is optimistic that the Act could get amended now. "It did not go through in 2000 because Coal India had losses on its balance sheet and there was a feeling that it would be swept away by competition...the thing that has happened to Air India...That apprehension was in the mind of trade union leaders and political leaders," he said.
"Today the situation is vastly different and that apprehension does not hold good. After the 2010 IPO, Coal India has proved that it one of the world's large coal mining companies. In terms of valuation and other things it comparable to world's best. In terms of cost competiveness, its cost of production is of the lowest in the world."
"Further improvement in Coal India will come from market completion, not administrative measures," he added.
He also said that the captive-mining model has not worked out successfully in the country.
"It was clear in the early 90s that Coal India alone cannot be expected to meet the entire demand of the country. That was the reason why the Coal Nationalisation Amendment Act 1993 was passed. But it was passed to give add players to through the captive mining route, end-users doing their own mining. This model was not found to be successful anywhere in the world. We see the same thing happening in the country. Twenty years after this model was tried, captive block segment their contribution to the total production is just 8 per cent," he said.
"In this process, we have not got players to get players with core competence in coal mining, with the required capability to deal with technological and safety challenges."
However, in the immediate term, to boost coal production, there should be forest and environment clearances and transport bottlenecks should be addressed, he added.
(With agency inputs)