Discussing the viability of the comment, Partha Bhattacharya, former chairman of Coal India said the company alone cannot solve the mining crisis, and more credible players should be included to make this a reality.
"The fact that Coal India would not be able to meet the country's demand for coal, if the power sector goes in for accelerated addition to capacity was understood in the early 90s. Due to that 1993 amendment of the Coal Mine Nationalisation Act was carried out, which allowed the government to take out blocks from Coal India and give it to captive end-users," Bhattacharya said.
He, however, feels that Coal India must improve its production as it was doing some 3-4 years ago. "Coal India had accelerated its growth to well over 6.4 percent in 2008-09, achieved close to 7 percent in 2009-10, and was on its way towards 7-8 percent growth, when all of a sudden in 2010-11, the Ministry of Environment and Forest introduced Comprehensive Environment Pollution Index (CEPI) and a blanket ban on all industrial expansion," he said.
Bhattacharya feels that the government should open up the coal sector and get competent players to aid availability. He thinks the issue related to reducing E-auction volumes should be left to Coal India.
Harshvardhan Dole, Vice-President--Institutional Equities, IIFL, said the Power Minister has tried to ensure that no plant should remain stranded due to lack of coal availability and that is "an extension of the policy that was envisaged by the previous government and absolutely a step in the right direction".
He feels that the government must now ensure that there's an increase in the power offtake from the current levels.
Below is the transcript of Partha Bhattacharya and Harshvardhan Dole's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Sonia: The first comment that was made by the power minister that the coal supply issue will be addressed by the new government but we all know that Coal India alone cannot meet the requirements of the demand that is currently there in the system. In your mind, what are the one-two or three steps that need to be done in order to ensure higher supply of coal?
Bhattacharya: It is important to understand the problem at its roots. Without that, we will not be able to come to a proper solution. The fact that Coal India would not be able to meet the country's or the power sector's demand for coal is the power sector goal for an accelerated addition to power capacity, which was understood very well in early 1990s. That is the reason, the 1993 amendment of coal mine's nationalisation act was carried out which allowed the government to take out blocks from Coal India and give it to captive end-users.
So having known that situation 20 years back, I don't think much could be achieved just by forcing Coal India to supply coal to power stations. The fact that you have to add credible number of players in the mining space in order to make it happen, you require couple of Coal Indias to make it happen. A company of Coal India's size cannot meet the demand of the entire country.
The basic mistake that took place is having understood that Coal India cannot do it again in 2007, when the new coal distribution policy was enacted, a line was put in the policy document that Coal India will have to meet everybody's demand. So that is the genesis of the whole issue today. That is how, the government doesn't have any other means other than to force Coal India to increase production and continue supplies.
Coal India definitely should increase production, there is no reason why it should continue to languish like the way it has done for the last three-four years but again there is a reason to that. Coal India has accelerated its production growth to well over to 6 percent, it achieved 6.4 percent in 2008-2009, achieved close to 7 percent in 2009-2010, was on its way to move towards 7-8 percent kind of growth when all of a sudden in 2010-2011, the ministry of environment and forest introduced something called Comprehensive Environment Pollution Index (CEPI) and introduced a blanket ban on all industrial expansion in all the areas which are critically polluted without looking into what are the industries, that are leading to this critical pollution. Had they done that then coal mining would have been spared in those days. So that is the reason why in 2010-2011 and 2011-2012 Coal India simply fell flat. The growth rate was just over 1 percent or so.
In these two years, Coal India has missed out on production of at least something like 55 million tonne. So today our production level in Coal India would have been 55 million tonne better than what it is just because of that single act.
The second is no new credible players are getting added. So in this situation, I am not convinced that actual steps that are required to be done are being taken. What we need to simply do is to open up the coal sector and get formidable mining players. Players with core competence in coal mining and that is what is going to make a difference.
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