The Hindu Business Line : Call to amend coal mines Act to allow private participation

The Indian national committee of the World Mining Congress has suggested that the pending Bill (2000) in Parliament, which recommends amendment of Coal Mines Nationalisation Act (2000), be passed early to enable participation of private sector in exploration and mining of coal on the lines of oil/gas sector. This apart, the committee feels that oil PSUs should also be encouraged to develop coal blocks abroad in order to transform them as "energy company" as has been done by British Petroleum.

Encourage oil PSUs

The Chairman of the national committee, Mr S.K. Chowdhary, said that coal-bearing States should play an increasing role in coal mining either directly or as joint venture partner. The Union Ministry of Coal, on the other hand, should set up a Task Force to draw a blueprint for underground mining development with specific objective and formulate a policy framework for international bidding of coal blocks by coal PSUs or PSUs with joint venture with foreign partners.

Mr Chowdhary, a former Chairman of Coal India Ltd (CIL), told Business Line that the Government must decide to offer 40 to 50 large coal blocks to experienced foreign parties or Indian parties in joint venture with foreign companies to develop underground (UG) mines of 2 to 5 million tonnes production per annum. In return for the risks taken, the government should remove the bondage of captive allotment and give them right to market coal freely through 100 per cent e-auction.

As detailed exploration is time-consuming and costly, private sector participation may also be encouraged with government funding in addition to work by Central Mines Planning & Design Institute (CMPDI). It is thus suggested that captive operators willing to accept only regionally explored coal blocks and undertake detailed exploration themselves at their cost and risk under CMPDI, should be encouraged.

CIL monopoly

With the withdrawal of the administered pricing mechanism, Coal India is now a virtual monopoly. He said it was important to set up a Coal Regulatory Commission to protect the interest of coal consumers, to review the price structure and productivity. The quality of coal also needs to be monitored.

He also said that coal prices should be linked to international prices of coal and oil. Rail freight, which is an important constituent of cost of the delivered coal, must also to be regulated by a Railway Regulatory Commission to avoid distortion in rail freight due to passenger subsidy.