Time To Spin Off Coal India Subsidiaries As Separate Entities Recommends Niti Aayog

Around three quarters of our power comes from coal powered plants today and this scenario will not change significantly over the coming decades. Under this reality check, Niti Aayog has laid down series of recommendation and policy vision in its three-year action agenda for 2017-18 to 2019-20, focussing on coal sector, stating how it is imperative for the country to increase it's domestic production.

To begin with, Niti Aayog recommends the much talked about the market mechanism to open the coal mining sector for commercial mining. Allowing specialised mining firms to mine coal can go a long way towards improving the efficiency of mining.

The government is already working on various auction models with regard to the sale of coal blocks for commercial mining by the private sector, for the first time in four decades. They have been stating how doing so would bring in more competition in the coal sector and reduce the power tariff.

Second, the agency also says that there is a need to end the current practice of segmenting coal markets between power and non-power sectors with subsidy being given to the ultimate intended beneficiary through direct benefit transfer.

“The implementation of the proposal to spin off the subsidiaries at CIL as separate public sector entities must also be implemented so that they may independently develop their own strategies and business model”, adds the paper.

Railways have a critical role to play in the coal distribution network, to which Niti Aayog emphasises on the completion of three critical railway lines namely Tori- Shivpur, Jharsuguda-Barpalli and Mand-Raigarh, to significantly augment coal evacuation.

The committee has also laid emphasis on improving the labour productivity, “The output per man shift from underground miners should be raised to increase coal production from underground coal mines which are currently 8 per cent of the total coal production”.

On the lines of china, the Indian government must take steps to reduce the use of low-quality coal. The agency draws the stark comparison between both the nations in the usage of quality coal. The quality used in India has high ash content and low energy content which makes us use 640 grams coal per KWh in comparison to China which uses 308grams coal per KWh and targets to reduce even further.

Finally, to boost production, the ongoing auction process and transfer of mining lease and other related activities of captive mines to the new successful bidders should be expedited by 2018. The production from captive blocks has been targeted at 400 MT by 2020, where the yearly targets should be devised and coal miners should be re-allocated to achieve the above target.

At the institutional level, the organisation says that an independent organisation will be created to develop and maintain the repository of all coal-related geological information in the country. The proposal to set up coal regulator to foster competition in the sector apart from advising the government in formulating policies for coal price determination will be implemented.