Coal India Limited (CIL) may be one of the most profitable PSUs in the country but that hasn?t stopped it from landing in a mess created by the government. For a company planning a mega public issue, this is most unfortunate. The navratna company with a net worth of Rs 24,541 crore as on March 31, 2010, is a crucial player in India?s race for energy security. Yet it has to reckon with an ongoing tiff with the railways over how many wagons they need to transport the coal it produces. In 2009-10, CIL produced only 415.9 MT of coal, a growth rate of less than 4% as the railways could provide, on a daily basis, only two rakes more than the year before. The railways have fiercely contested the accusation but have not denied it. The position is the equivalent of not having the pipeline to evacuate the natural gas produced at the KG basin. Privately, railway officials acknowledge that they are in a gridlock, which is unlikely to dissolve soon. Because even if the wagons are made available, they face a shortage of drivers to run those rakes. Coal India has hardly ever held any glamour for political leaders. But in the next few years, as the demand for coal mounts to meet the needs of energy to power GDP growth, this mismatch will prove costly.
The other problem that has cropped up is in coal imports. The public sector company plans to import coal from fields in Africa, Australia and elsewhere. But the coal ministry has put in a clause that says CIL can acquire coal assets abroad in joint ventures only with listed companies. There is just no rationale for the restriction. How does it matter whether the company with which CIL or anybody, for that matter, plans a tie-up is listed or not? First of all, several of the large entities abroad in the coal sector are unlisted and so are immediately made off-limits by this restriction. If it was assumed the ministry wanted to ensure compliance with corporate governance, surely that is something a navratna should be able to sort out itself. That it has not been given complete freedom suggests the interests of the company and the nation on the one hand and sections of the policymakers on the other are not the same.