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Millennium Post

The coal imbroglio

Coal has occupied the centre-stage of national debates for months. There is need to look beyond the ongoing controversy and put an appropriate legal framework in place that would subserve the long term requirement of our growing economy and even facilitate a faster growth. To bring about transparency and higher revenue, government seems to have laboured for years. The efforts, initiated in mid 2004, seem to have been finalised in 2011 even though the first coal block is yet to be auctioned. That our economy would witness the first auction before the next election is highly unlikely. In our anxiety to design a foolproof arrangement we seem to have laboured to bring fineness to a basically flawed legislation. Instead, we should have applied appropriate corrective in 2004 itself. There was telltale evidence that compulsion of our economy was infusing a sense of pragmatism into the approach of relevant political forces in the country. We should have taken note of the unmistakable signal the relevant political forces were emitting.

Among the subsidiary companies of Coal India, two were on loss for quite some time. While Bharat Coking Coal’s turnaround seemed more difficult, Eastern Coal Fields was amenable to faster recovery if a few innovative measures were taken. Some activities had to be taken out of departmental operation and outsourced. That would have improved both productivity and production. Despite the urgency, we were apprehensive of labour unrest if such measures were taken. I, as Coal Secretary, had therefore decided in 2003 to seek the guidance and help of the Chief Minister, Buddhadev Bhattacharya. I explained to him why there was need for quick action. ‘New metallurgical industries are coming up in the state and demand for coal is on the rise. The state needs to produce more coal to meet the growing demand of the industries in the state’ I said. Chief Minister agreed with this assessment. ‘I would like to outsource certain activities in coal mining’, I suggested. His response was encouraging. The rigidity on labour practices was being diluted by the leftist leader in the interest of revival of the state’s economy. This had impressed me a great deal. A few days thereafter, I was told by the chief secretary to meet Shri Haradhan Roy, a veteran trade union leader and a communist leader of standing and to discuss with him on the issue I had discussed on with the chief minister. Basudev Acharya, the veteran CPM leader and member of Parliament, came along with Haradhan Babu. I took the same position as I did with the chief minister. He listened to me silently and patiently. It was his turn to respond. He stood firm on his known stand. My recipe was totally unacceptable to him as it was contrary to the principles of purity and probity he had been following for decades. My talk had had no impact on him. Chief Minister, however, stood by his assurance and the new practice of partial outsourcing of coal mining operation was introduced in the Eastern Coal Fields Ltd – a measure, which, when I thought of it initially, had appeared to me  an impossible task in a state when the Left parties were in power. I left the ministry, on retirement in
February 2004.

Looked pragmatically, how do we see the public sector coal companies operating thereafter? Most areas of mining activities are increasingly being outsourced to operators. For example, working of a twenty million ton capacity mine, Bhubaneswari, in Mahanadi Coalfields has been completely outsourced to a party selected through open bid. Trade Unions by and large have allowed this transformation to happen. We need to take the process ahead, to its logical end. UPA government has succeeded in amending the MMDR Act that now permits allocation of coal blocks through public auction. It is time we did away with the concept of captive coal blocks for specified end use.
Central government had decided to amend the Coal Mines (Nationalisation) Act, 1973 to allow Indian companies, both in the public and private sectors, to mine coal in the country without the existing restriction of captive mining. Accordingly a Bill, namely the Coal Mines (Nationalisation) Amendment Bill, 2000, was introduced in the Rajya Sabha on 24 April 2000. This Bill needs to be followed up actively and a political consensus worked out. Political parties, now used to multi-party government, would see merit in bringing about necessary change in the law. Thereby we would introduce merchant mining in coal sector that would ensure faster application of technology and optimal exploitation of the mineral resource. We would create thereby meaningful competition in the coal sector and would ensure level playing field for industrial activity. We could offer underground mines along with surface mines for auction in one lot. Thereby the country would ensure meaningful exploitation of our coal reserve that lies between 50 and 100 metres deep. A regulator could be put in place to enforce internationally practised norms of mining; pricing and closure.

The concept of captive block is feudal; it is discriminatory and it promotes minimal rather than optimal exploitation of a critical natural resource. The fact that the provision of captive block remained in the Statute Book for years is no vindication of its rationale. Our economy suffered it in the absence of a better alternative. Time for adopting the better alternative has arrived. The recent country wide debate on coal has demonstrated its need. We should ensure enabling legislation to make it possible for the country to have more players of the size of Coal India to take care of the coal need of the economy.

The author is a former Coal Secretary to Government of India
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