Structural Reforms Needed

The performance audit report on the Ministry of Coal (MoC) by the Comptroller and Auditor General (CAG) of India, placed in the Parliament recently, has exposed another major scam. Both the2G scam and the coal scam have their roots in structural reforms started some two decades ago.

 

When the power sector started facing a serious crisis in 2001, the Power Ministry announced an ambitious programme, “Power for all, by 2012”. It aimed at an additional 70,000 MW of power to the Indian grid and announced further strategies.

 

The concluding chapter of CAG report starts with a candid observation: “The production of coal has assumed greater significance after the Government of India announced its mission ‘Power to all by 2012’. Coal being the most important indigenous energy source of India, with a GR (geological reserve) of 285,863 million tons, the roles of various agencies involved in exploration, production and allocation of coal has, thus, increased correspondingly.”

 

Coal accounts for 55 per cent of the country’s commercial energy consumption, which increased seven-fold during the last 40 years. Given the stocks and facilitation of petroleum, natural gas, nuclear and hydel power, coal will continue to play a crucial role in India’s energy scenario in decades to come. Our coal reserve is over 285 billion tons; around 100 billion tons are proven. However, they are spread over 27 major coalfields and confined to half a dozen major states. Ninety per cent of the lignite reserves, that isaround 36 billion tons, occurs in Tamil Nadu. 

 

The MoC is the sole custodian of Indian coal and its development. It is a complex organisation, responsible for the production and prospecting of coal and lignite, and for their marketing and distribution. It is supported by the Coal Controller’s Organisation, a statutory body. The CAG report has revealed numerous shortcomings of the MoC and associated institutions: Delays in land acquisition and associated problems of rehabilitation to name a few.

 

The CAG report has recommended a single window mechanisms for the clearance of mining projects along the lines of the Foreign Investment Promotion Board (FIPB). It has suggested the hierarchy of officials to run it.However, the efficacy of this system is very poor in our country, thanks to lack of expertise and professionalism in governance. Moreover, it is a poor substitute for the decentralised governance administration practised in more developed societies. The Coal Comptroller’s Office in Delhi may retain its policy making powers as decided by the MoC and the Parliament. But state governments could play a much larger role in coal sector administration and laws. The CAG report has also highlighted the failure of the Coal Comptroller’s Office. It indicates the need and relevance for developing state level counterparts for the Coal Comptroller in Delhi.

 

Restructuring of the office of the Coal Comptroller in Delhi and re-organisation of the public sector coal companies will greatly help in overcoming most of the shortcomings and problems brought out in the CAG’s report. Active participation and involvement of the state governments in the management of coal companies will make them far more responsive, and help them to seek more democratic solutions for the problems faced by them. Andhra Pradesh is an example: Singareni Collieries Company Limited (SCCL) is a Joint Sector Undertaking of the Government of Andhra Pradesh and Government of India. The SCCL’s equity structure is worth studying for emulation by Coal India Ltd (CIL) and its subsidiaries, so that coal administration may be liberated from the bureaucratic stranglehold of the MoC.

 

Coal bearing states are eligible for royalty payments fixed by the central government in an arbitrary manner and not based on sound federal principles. Indian coal should serve as a cheap source of energy and support economic development even in the non-coal-bearing states. 

 

The CAG report, has estimated “the financial impact of the benefit to the private allottees of 194 net coal blocks to be Rs 1,85,391 crore”. Many of these blocks were taken away from public sector companies and re-assigned to private investors in the name of meeting the power generation targets set by the programme, “Power for All by 2012”. Large scale imports were the net result of this step-motherly treatment meted out to coal mining companies in the public sector.

 

The diversion of coal blocks from public sector companies has affected coal production as well as power generation. What is needed now is political action towards genuine reforms, for curbing bureaucratic and political corruption, in the coal as well as power sectors.

 

 

 

(The views expressed by the author are personal)