COALspot.com - India has the one of the richest coal reserves in the world and the country should have shown significant progress and gained the position of a major energy supplier for the world. However, the scenario is quite different today. The coal production of the country is short and the import figures are scaling with each passing year. The principal reason for the poor performance of this sector has been stringent government & regulatory control over coal production. After the sector was nationalized in 1973 with the passing of the Coal Mines (Nationalisation) Act,the motive was to bring the most essential commodity, coal, under a central regulation so that large coal-consuming industries, like power , cement and steel, could be supplied coal at reasonable rates . But, this act is proving a blockage in the way to save the country from its ‘shortage’ status.

India received global attention after the historic blackouts in recent past (2012) that put over 600 million people in the dark. Following the media aftershock thereafter, one thing was abundantly clear that coal is lifeblood for India in particular and developing economies in general.The country's industrial growth is crucial for development and prosperity. Energy supply is vital for achieving that avowed purpose. Unfortunately, the out-dated infrastructure cannot cope with the economic expansion and population increase. The government needs to give impetus and invest in this crucial sector, monitor mining rights, improve the mining techniques, widen the supply chain system and cut down the huge handling loss/wastage associated thereto. Combined with many other related factors, the blackout of year 2012 was a matter of serious concern. India has added significant coal-fired generating capacity in the recent past but there is limitation of availability and accessibility of sufficient thermal coal. India needs to make huge investments in the energy sector and bring reforms in mining sector otherwise it would see many more power failures and blackouts and there would be total social unrest. Besides, India just cannot switch over to gas or nuclear or wind or solar energy as an alternative source of energy generation. Energy supply to the nation is as vital as blood in veins of the human body. Coal is the “lifeblood” for Indian economy.

It is a wake-up call for giving serious attention and consideration for privatisation of coal mining in India.

India is heavily dependent on thermal coal for power generation. In India, for instance, 60% of electricity capacity is dependent on coal-fired generators. India is characterized as drivers of the global thermal coal market and the demand is indeed robust.

The Indian government must woke up and take initiatives to remove the malaise , specially :

- Transparency in coal block allocation process through competitive bidding for private sector
- New terms for fuel supply agreements to improve supply to power plants
- Shift in pricing mechanism to GCV based grading of coal to align domestic prices with international levels
- Setting up of Independent coal regulator to bring in an order in price fixation , e-auction.Mining is an important part of India's economy, but that does not mean the industry should be allowed to write its own rules.The government can and should empower regulators to do their jobs more effectively than they can today.
- Faster clearances to mining projects of CIL to increase production.
-Private , Public participation in Coal Sector.

The Deputy chairman of Planning Commission of India has made a strong opinion for privatization of the coal sector to meet the growing coal demand in India.If petroleum, which is much scarcer than coal, is open to private sector, there is no reason why coal should not be opened up.It is simply not logical to keep private investment out of coal sector, when it is allowed in petroleum and natural gas. As of now, coal sector is the exclusive domain of state-owned Coal India Ltd (CIL) and its subsidiaries, which produce 436 million tonnes of coal accounting for 80% of the country's production.In 1973 when coal sector was nationalised by setting up Coal India Limited, a holding company for all coal reserves in India, with a fear of mafia taking over the important mineral produce but to Conservation of scarce natural resources & preventing relentless mining and improve the safety mechanism in the working environment, but today Coal India Ltd for the reasons known to all concern ,doesn't have the capacity to meet the coal demand of 40000-45000 MW power plants.Coal India alone will not be able to meet the total demand from the consumers and country will face annual shortage of 150-million tonnes, forcing the major companies, specially power generating companies to go in for coal imports. Presently, private companies are allowed to do captive mining in specified end-use sectors like power, steel and cement companies.

India is blessed with significant reserves of various natural resources , including coal and can produce all the key imported resources indigenously at 15-20% of the import cost. Thus, India can save $250-300 billion on yearly basis and, within 3-4 years and add $.75-1.00 trillion to the economy. India’s current underutilization of resources speaks of unbelievable story. Despite having a similar geology to North America, Latin America, Australia and South Africa, India produce only 20% of our natural resource requirements.

The mineral exploration industry in countries such as Canada spends over $2 billion per annum in greenfield exploration, whereas India spends less than $50 million.

For a country with one of the largest reserves of various natural resources in the world, the transformational potential of India’s resources sector is immense. The sector has the potential to add $1 trillion to the Indian economy that can substantially contribute towards much-needed investments in education, health and nutrition. India’s economic rise since 1991 has resulted in a sharp rise in resource needs, from Petroleum products to Power and Infrastructure. This, in turn, has led to a burgeoning import bill that stands at $485 billion. Oil and petroleum products is the single-largest contributor with $150 billion. This is close to 10% of the country’s GDP. Gold, silver, coal and fertilizer are the other main items that are adding to this bill. If this continues, vulnerability of the Indian economy to external shocks will become higher. It is, therefore, imperative to take corrective actions immediately.

In India, private sector participation will not only help increase the supply, but will also lead to investments towards developing integrated coalfields,Logistics & infrastructure and allied sectors. There are direct tangible benefits to private sector participation in coal mining, ranging from employment generation, contribution to GDP, control over inflation, greater self- sustenance in energy security and growth of the value chain (including equipment and service suppliers). Private investors are also more likely to pick up coal assets for mining in areas where the government is reluctant to invest, for lack of technology and infrastructure or because the seams are deeply embedded. Greater domestic production from the private sector will, in turn, lower the burden on the current account deficit and balance of payment, control subsidies and create allied advantages in terms of its impact on power tariff, cost of steel and cement and the development of alternate energy sources like coal bed methane (CBM).

The issue of privatization of coal is about energy security, growth of the economy and the future development of the country.

India’s power and infrastructure needs continue to be unmet and under -served due to lack of an open and simple exploration policy that will allow exploration of resources in a sustainable manner. The fear that such a move will lead to rampant environmental degradation is also unfounded. With scientific mining and latest technology in mine development and production, these concerns can be fully addressed. A self-declaration policy will allow the companies to take responsibility for their actions, while enabling the government to impose heavy penalties in case of violations.

India’s need of the hour is greenfield exploration. India only has a handful of oil and gas companies. It is imperative to have 10-20 players that will bring in the technology and explore sources that will lead to the development of the exploration and production value chain and also act as an employment multiplier. Similarly, in case of Coal and other minerals, many more players need to be brought in for exploration. It is in the industry’s interest so also in the overall economic growth of the Country, to increase mineral reserves through exploration to provide value to the stakeholders in a sustainable manner. Exploration of domestic natural resource reserves and, thereby, developing manufacturing sectors will not only unlock India’s true potential as an economic powerhouse, it will also help create better & improved infrastructure, generate employment and bring in the latest technology. It can generate significant additional revenues to the government that can be used for the social sector, investment in education, health and nutrition.

Unearthing the hidden treasure though scientific exploration and bringing new mines on the mineral map of India with the latest technology alone can empower the people of India.

We are increasingly expecting the private sector to push power generation. The natural next step should be the liberalisation of the fuel supply chain to unleash competition. Without adequate supply at competitive prices, the growth story in the power sector and other end-use industries would be at risk. In any forward-looking democracy, the government must transfer the business of doing business to businesses and focus on governance and the welfare of its people. Therefore, these objectives can form the pillars of regulatory oversight so that the spirit of the nationalisation remains even as the government attracts private sector participation in coal mining.

It is high time for Govt to support the move to Privatise coal mining in India as the move will usher competition and bring in the much needed latest mining technology. The privitasition could also attract global mining firms into coal mining in India. New players will add competition, increase production and bring new technologies too. Being a national resource, it is natural that the benefit should go to the nation. In the event of privitasition , the private sector will be allowed to get the benefits of its efficiency in operations, management and technology but the value of coal reserves should rightfully go to the Country.

In Annual Budget for 213-2014 the Finance Minister has announced for Public Private Partnership (PPP) mode for raising coal for bridging the demand supply gap in coal. This will bridge demand-supply gap and also improve efficiency & quality. Additionally, it would benefit large coal-consuming industries such as thermal power, steel, cement and fertilizers and chemicals.Allowing international mining companies to participate will allow better technology in exploration and mining and would be able to take care of environmental concerns. Presently getting environmental clearances has become very difficult. Better technology will be able to take care of the same. Presently output per man shift is very low and participation of private producer will improve with better planning and operations. Further safety records in India are very poor with participation of foreign private companies safety records are improve.

For India to maintain high growth, it is imperative that energy is readily available and is affordable. With the shortage of coal, generation in different power plants is getting affected. Importing coal to meet the demand deficit may make sense on paper but the very prospect of importing coal in today's circumstances is giving sleepless nights to many power producers.

Can India do without energy?  The answer is an emphatic “No” since energy is universally recognised as one of the most important inputs for economic growth and GDP.

The growth of an economy depends on the reliable availability of cost-effective energy sources invulnerable to short- or long-term disruptions. India is no exception to this rule.
Author: Sunil K Kumbhat, Jodhpur ( India)

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