Reform or Farce: Whom will NDA Govt.’s Coal Privatisation Benefit?

After opening up coal mining to private sectors for commercial use in the last week, the central government has now begun the process for shortlisting coal mine blocks for the first round of auctions.

Coal blocks – each block having not less than 50 million tonnes of reserves, to be shortlisted for first round auctions are from four central Indian states – Odisha, Chhattisgarh, Madhya Pradesh and Jharkhand. The final auction is expected to be finished by March 2019.

While global mining giants such as Rio Tinto and BHP Billiton have reportedly expressed interest in prospecting coal from India with this initiative, the state-owned Coal India Limited (CIL) which is the world’s largest coal producer will cease to be so in near future, experts say. CIL which meets almost 80 percent of India’s energy needs, cut down its coal producing target for 2017-18 from 660 MT to 600 MT in April last year, mainly because of flagging demand.

In August 2014, the Supreme Court canceled the allocation of 204 coal blocks where mining was being operated by public and private units, terming them as “illegal”. Following this, the NDA government enacted the Coal Mines (Special Provisions) Act, 2015, by including in it a provision enabling commercial coal mining by private players.

As of 2014, a cumulative total of 301.56 billion tonnes of coal reserves have so far been estimated across states in the country.

Trade unions including CITU and AICWF have earlier claimed that privatization of coal sector will compromise the safety and wages of the workers. On the other side billionaire Anil Aggarwal, chairman of Vedanta Resources, described the move as “path-breaking and bold reform”.

Earlier this month, Supreme Court quashed all iron ore mining permits in Goa, among which Aggarwal’s Vedanta Resources is the biggest iron ore miner in the state.

Though the government termed the privatisation move as “ambitious reform” in the coal sector, it will take some time to implement the changes. Auctions will take a year to complete and simultaneous setting up of mining infrastructure after acquiring land will take more than three years.

Instead of integrating the CIL, this government’s move of opening coal mines to private players has thus been widely criticized by workers in CIL. There are fears of job losses and changes in terms of service.