Suresh Prabhu panel rejects the idea of restructuring Coal India

THERE are some good news for the tens of thousands of employees of the Coal India Limited. As the government gears up to overhaul the coal mining sector, the Suresh Prabhu-led advisory group for integrated development of power, coal and renewable energy’ has rejected...

the idea of restructuring Coal India Ltd (CIL).

At present CIL has the distinction as is the world's largest coal miner and has a monopoly in the sector. The panel submitted its its report to the government last month.

The panel recommended empowerment of the company’s subsidiaries, said a media report.

The subsidiaries may be given adequate delegation of power, capital expenditure and operational flexibility, along with commensurate accountability, so that their dependence on CIL for decision making does not hamper fulfilment of targets set out for them,” a business daily quoted from the advisory group’s report.

The advisory group suggested for more coal, improvement in parameters for performance of CIL subsidiaries — CCL, MCL, SECL, ECL, WCL; hiring of at least two mining development operators within six months; close monitoring of CIL’s annual targets; fast-tracking production from captive coal mines; better availability; separate CIL subsidiary for building evacuation, including rail lines among others.

The group also suggested for forming joint venture (JV) with private companies to build rail links apart from calling for dedicated rail corridor for a mine cluster.

The group has also cautioned against auction of the coal blocks.

There were proposals to divide the Maharatna PSU into five separate entities to improve efficiency. The UPA government had earlier supported the idea.

However, Piyush Goyal, minister for coal, power and renewable energy, has said he feels splitting is not a solution, efficiency improvement is.

“Several options regarding the restructuring of Coal India were discussed. It was agreed that no major restructuring was required, at least in the short term,” said the report.

Setting revised targets for the energy sector, the NDA government wants CIL to raise its production to one billion tonnes by 2019.

This would entail increasing the rate of annual output growth to 18-20 per cent from the current seven-10 percent.

“In the subsequent two quarters, growth rates of 15 per cent could be a big challenge. It would, therefore, be necessary that specific action plans on various identified constraints be made and monitored,” said the report.

For enhancing production, the report suggested hiring of ‘Mining Development Operation (MDO)’ agencies and re-opening of abandoned underground mines. “The coal ministry should give a target to each subsidiary to engage at least two MDOs (10 million tonne annual output) each, within six months.”

The committee has also asked for close monitoring of CIL targets for 2014-15, on a fortnightly basis, and engaging an experienced consultative agency to help monitor performance.

The report underlines the need for swapping of coal, rationalisation of coal linkages and monitoring the sale of surplus coal from captive mines.

The report pushes the idea of private investment and joint ventures by CIL and its subsidiaries in rail-linkage projects, to reduce dependence on Indian Railways. It also mentions setting up a dedicated common rail corridor for clusters of mines in coal-rich areas.

Following the Supreme Court's cancellation of 204 block allocations made over two decades, the government in October promulgated the Coal Ordinance (Special Provisions) Bill, 2014.

Now, the government will re-allocate the cancelled blocks and open the sector for commercial mining by the private sector.

The committee was headed by Suresh Prabhu, railways minister who formerly was power minister in the Atal Bihari Vajpayee government. The other members were R V Shahi (former Power Secretary), as member-convenor, Pratyush Sinha (former chief vigilance commissioner), Anil Baijal (former home secretary), Anil Khandelwal (former chairman, Bank of Baroda), K K Nohria (former chief executive officer of Crompton Greaves), Partha Bhattacharya (former chairman of Coal India), and Vallabh Bhansali (former CEO of ENAM).