Govt considering report on Coal India restructuring

Aug 08 2014, 01:40 IST
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SummaryIndia's coal ministry said it was studying the recommendations of consultants Deloitte on restructuring options for Coal India, the state behemoth that has failed to meet its output target for years despite having access to large reserves.

India's coal ministry said it was studying the recommendations of consultants Deloitte on restructuring options for Coal India, the state behemoth that has failed to meet its output target for years despite having access to large reserves.

A government committee has urged the ministry to restructure the world's largest coal miner to help reduce shortage of the fuel, which accounts for more than two-thirds of the power generated in the country.

Responding to a lawmaker's question in the parliament if there was plan to break up Coal India, Coal and Power Minister Piyush Goyal said on Thursday that a draft report submitted by Deloitte on "possible restructuring options" was "under consideration".

Reuters reported on May 21 that new Prime Minister Narendra Modi was exploring breaking up the company and opening up the nationalised sector to foreign investment to boost output and cut imports.

Sources have said that one of the options was to convert some of the seven producing units of Coal India into independent firms, and making respective state governments equity holders to help speed up land acquisition and other such processes.

The company produces about 80 percent of the total coal dug out in India and feeds all but four of the 86 coal-based thermal power plants, but its inability to raise production fast enough has made India the third-largest importer of the fossil fuel.

Imports hit 168.4 million tonnes in the fiscal year through March 31 and are rising, as the new government has promised to scale up power output to light up every home. About 400 million of the 1.2 billion Indians still live without electricity.

Shipments of thermal coal, used in power generation, are expected to surge 11 percent to 150 million tonnes this fiscal year, according to online market operator mjunction.

With growing imports and power plants running on critical stocks, the clamour for Coal India's restructuring has grown. The finance ministry said in its Economic Survey report on July 9 that the process of "restructuring Coal India needs to be pushed through swiftly".

But as the government looks to shape up Coal India for a potential stake sale and restructuring, the miner still faces basic problems such as lack of enough mechanical shovels, dumpers and explosives.

Goyal will also have find a way to deal with Coal India's powerful unions, which have vowed to hit the streets against any stake sale or restructuring.

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