All legal Enablers in Place for Pvt Sector Entry in Coal Mining

Kolkata: The process of involving the private sector with coal mining was completed on January 8 with the Union government deciding to liberalise norms for entry and also relax regulations on mining, processing and selling coal in the country. This means that all the legal enablers are in place. The Centre chose the ordinance route – Mineral Laws (Amendment) Ordinance 2020, which has within its ambit relevant sections of two legacy Acts, Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015.

Significantly, the Centre’s decision has brought to the fore chances of a change in the protest strategies of aggrieved trade unions. Instead of organising protests in New Delhi and other cities/towns, they plan to start protests at the grassroot level and involve adivasis and other prospective land losers in forest and non-forest areas. This is in order to make them aware of what might be in store for them and take up their cause soon after a coal block is auctioned and allotted to a private sector party, domestic or foreign.

The announcement by Union Coal Minister Prahlad Joshi and his subsequent clarifications clearly suggest that the Modi government has taken note of the massive response to the strike organised on September 24 last to voice their opposition to the new provision for 100% foreign direct investment (FDI) in coal mining, processing and sale announced on August 28 last. It was also made clear then that processing would include setting up of washeries and facilities for crushing and coal handling. Ultimately, Joshi had to say that there was no intention to allow FDI in Coal India Ltd (CIL) and Singareni Collieries Company Ltd.

This time round, the Modi government, known for its strident posture on disinvestment and privatisation and using these as tools for bridging revenue deficits, has injected a sweetener in the announcement. It says that it will continue to allot blocks to CIL without any charge, support it and safeguard the interests of labourers. It is another matter as to what the unions think of the sweetener.

This government has always described the coal sector reform moves to involve the private sector as an attempt to move from an era of monopoly to competition.

Knowledgeable quarters argue that the Modi government misses the point that “it was a consciously created monopoly under the compulsions of circumstances in the early 1970s”. There was the oil price shock which forced the country to take a fresh look at the energy options. Coal was identified as the primary source of commercial energy.

Secondly, the much-needed investment for growing the sector was not forthcoming from coal mining outfits which were largely with the private sector. National Coal Development Corporation (NCDC) formed in 1956 as a public sector undertaking for taking over the collieries then under the Railways was supplementing coal supplies. (Central Coalfields Ltd was the new avatar of NCDC after nationalisation). The objectives of nationalisation as listed by the then Steel and Mines Minister S Mohan Kumaramangalam and okayed by the then Prime Minister Indira Gandhi were:

Conservation of coal resources by halting wasteful, selective and “slaughter” mining, planned development, improvement in safety standards, ensuring adequate investment and improving the quality of life of the workforce.

Kumaramangalam in his book Coal Industry in India: Nationalisation and Tasks Ahead had this to say. “[L]iving conditions for workers were inhuman, they were denied their wages and other dues with the help of stick-wielding musclemen (particularly in the Jharia fields in then Bihar and now Jharkhand) and official inspectors colluded with the owners. Workers’ only option was to borrow money from moneylenders at high rates of interest...” Sensing decisive government action, the colliery owners had even entered the names of outsiders in the attendance registers.

Thus, on October 16, 1971, the management of all the 226 coking coal (metallurgical grade) mines were taken over (captive coal mines of (then) Indian Iron and Steel co., Tata Steel and Damodar Valley Corporation were excluded). The mines were nationalised on May 1, 1972, and Bharat Coking Coal Ltd (BCCL) was in place. On January 31, 1973, management of all the 711 non-coking coal mines were taken over and nationalised with effect from May 1, 1973 and a new company under the name and style of Coal Mines Authority Ltd (CMAL) was formed. Ultimately, a new holding company Coal India Ltd was formed and the status and the jurisdiction of other subsidiaries were clarified. This included bringing BCCL under the CIL fold. In step with the times, new subsidiaries carved out of existing ones were created. Coal mining in the Northeast (Mergherita) was kept under CIL’s direct control.

In 2018-19, CIL produced 606 million tonnes (mt) out of the total output of 730 mt. The domestic demand for 2018-19 had been estimated at 991 mt. At the time of takeover of mines/ nationalisation, the total production was in the range of 76-77mt. The taken-over mines proved low-yielding for various reasons including, of course, “slaughter” mining and other unscientifiic practices under the private management. Well over 500 mt of output was contributed by the new, big blocks at Singrauli, Korba, Rajmahal and North Karanpura.

Imports in the last fiscal were 235 mt, which comprised both non-coking coal (for thermal power plants) and coking coal (mainly for integrated steel plants). The surge in cal imports over the past 12-15 years can be ascribed to economic reforms in the early 1990s steered by Manmohan Singh and P Chidambaram, which had facilitated easy imports.

Partha Bhattacharyya, ex-chairman of CIL, told NewsClick that the step taken on January 8 should have been taken much earlier. “It is foolhardy for any country and its government to expect that a single company howsoever big to meet 100 per cent of the requirements, particularly when demand was rising. CIL was doing well and it had it proved its capacity for achieving an annual increase of 6-7 per cent but circumstances were warranting a higher rate of growth.”

In Bhhattacharya’s view, 120 mt of thermal coal (out of total import of 235 mt) imported by non-coastal consumers was substitutable with domestic supplies if production was higher.

The ex-CIL chief said if reputed international and big Indian firms chose to set up shop pursuant to the liberalisations, the country would gain in terms of superior technology, better conservation techniques and better post-mining practices. But ultimately it would depend on hassle-free land acquisition and faster forest and environmental clearances. It would call for joint Centre-state efforts, Bhhattacharyya suggested. In the context of auctions, he had gone on record to PTI on December 24, 2018 saying that revenue maximisation should not be the only focus of the auction methodology and mining experience and core competence should get more weightage in the bidding process.

Tapan Sen, general secretary of the Centre of Indian Trade Unions (CITU), described the latest instalment of reform as a retrograde step and said: “We have to change out protest strategy. It can’t any further be just New Delhi/town-centric. We have to reach the people who will be affected at the prospective project site and ensure that adivasis, other forest dwellers and prospective land losers are not duped. In the recent past we have had some success in this strategy in Chhattisgarh where we thwarted the efforts of the Adanis. We have to strengthen this form of protest and prevent loot”.

He does not support the removal of restrictions on end-use and wants the concept of captive mines for integrated steel plants, thermal power projects, coal washeries and fertiliser plants to continue. These industries are of critical importance to the economy and they should have their own coal sources for uninterrupted supplies, he argued.

Ex-Lok Sabha member Bangsagopal Choudhury, who oversees CITU’s functioning in the Eastern Coalfields Ltd area, said trade unions have been able to convey to the Centre that they would not tolerate any move to dent the importance of CIL. “On the issue of FDI, we forced the Modi government to declare that they no intention to bring FDI in CIL,” Choudhury pointed out.

Ms Amarjeet Kaur, general secretary of All-India Trade Union Congress, deplored the NDA government’s decision to pave the way for FDI and domestic private sector on a large-scale in coal mining. This government is not prepared to take note of the fact that coal mines had become sick because of loot by the private sector owners and the industry had to be nationalised in the economy’s interest, she added.

General secretary of Hind Mazdoor Sabha, Harbhajan Singh Sidhu said this government was not willing to change its policy of brining in multi-national corporations and “we have to devise stronger action programmes to make them change its policy”.

General secretary of Colliery Mazdoor Union in the ECL jurisdiction, Chandi Banerjeme, said: “We have seen the pitiable condition of workers in the private sector days. I was an employee. Indira Gandhi and Kumaramangalam together had saved the workers by nationalising the sector. Now, this government is doing all it can to bring brokers,” Banerjee observed.

Ex-Rajya Sabha member Ram Chandra Singh, who oversees functioning of the Colliery Mazdoor Sabha in the ECL area, said post-nationalisation the quality of life of workers had improved vastly and the management respects them. “Earlier, workers’ children had no access to education. Post-nationalisation steps were taken to augment education facilities. This government, a champion of private capital, should educate itself on the inhuman conditions in mines that had marked the private sector days in coal,” Singh observed.

All the TU leaders spoken to said the sweetener in minister Joshi’s statements that the government would see that CIL continued to grow is not convincing to us. “The trust-deficit between labour and the Modi government continues to widen. We might have been the reason for loss of man hours on certain occasions. But we also saw to it that CIL delivered. The bond between us and the company has deepened over the years. The Modi government’s divestment overdrive and its decision to hand over Bharat Petroleum to a foreign company continues to cause us concern. That’s the reason why we do not count on its sweeteners and clarifications,” they say and point out that already this government has mopped up over Rs 35,000 crore from CIL’s share sale. In the UPA regime, only the IPO was made and which had fetched Rs 15,745 crore. The only saving grace of the situation, they agree, is that the Coal Mines (Nationalisation) Act 1973 has not been repealed.