Since the beginning of this year, the world’s largest coal miner, Coal India Ltd (CIL), was expecting its restructuring after Deloitte submitted a report that is said to have suggested spinning off seven CIL subsidiaries into independent entities. The restructuring plan also called for handing over mines to private hands for merchant mining, wherein standalone mining companies would be formed with a cluster of mines. The idea behind such plans, following the TL Shankar Committee recommendations, was to bring about competition for increasing productivity.
The new coal and power minister Piyush Goyal has made it clear that there would be no restructuring of CIL as of now. But productivity and supplies to the power sector have to go up, and for that e-auction has to be cut down and linkage revisited.
If the UPA-2 government thought of restructuring as a way to reform the coal sector, the new government has gone into a problem-solving mode. The first major step towards it was bringing power and coal under one ministry. “This will put a stop to the blame game between the two ministries”, Partha. S. Bhattacharyya, former CIL chairman, said. But will that solve the real problems that are hurting consumers’ interest, asks Subhasri Chaudhuri, secretary general of the Coal Consumers Association of India.
Power utilities are still experiencing grade slippage—getting a lower grade against demand and payment for a higher grade—at the unloading end. This, despite the introduction of third party sampling. Coal supplied contain boulders, stone and uncrushed coal, which reduces the throughput of terminal siding—in receipt of coal rake and coal quality—and increases the landed cost of coal, through high detention and demurrage charges. The more the grade slippage, the more the requirement in tonnage terms, and this increases the demand-supply gap.
Further, there are issues like faulty weighbridges and erratic supply of coal over and above the larger issues of inadequate railway infrastructure and slow green clearances. But settling the small issues can help coal consumers to a great extent.
When a coal company regulates supplies to thermal power stations without taking them on board, it affects their coal stock planning, and in turn, generation. It is expected that with both coal and power coming under one roof, regulation will happen on broader consensus.
The minister has asked CIL to cut down on e-auction to supply that extra amount to the power sector, but that extra amount wouldn’t be too high to