The Prime Minister?s clearance for the freeing up of 18 coal blocks for specific exploitation in setting up 78,000 mw of thermal power plants, including private ones, is a landmark measure. It means that Coal India Ltd?s monopoly on domestic coal supplies is finally nearing its end. More importantly, it would help enlarge the contribution of thermal power to India?s overall energy security. Accelerating the pace of expansion of coal supplies is all the more crucial as an initiative because coal users are faced with critical shortages, as demand has far exceeded the projected demand and the country has had to resort to substantial imports to plug the widening demand/supply gap. In fact, given the current production scenario, the best option would be to go in for large imports to meet short-term needs and boost production over the longer term by setting aside captive mines for the power sector and other large users. The coal sector will hopefully get another big boost from the new coal distribution policy announced last week, which will help restore the e-auction route over the next month. Under the new scheme, around one-tenth of the annual production of Coal India Ltd would be now offered through the e-auction window and the company will provide early information on the quantity and quality of coal. All of this should help in the emergence of a proper coal market in India for the first time since the industry?s nationalisation.
However, the efforts to continue the prevailing micro-management of the coal sector through superficial changes in distribution policy?like dispensing with the ?core? and ?non-core? classification and replacing the system of granting coal linkages with a new procedure of granting letters of assurance that are convertible to fuel supply agreements?serve no purpose other than generating yet another round of whispers and intent-oriented speculation. Still, it is to be hoped that market mechanisms will gain critical mass soon enough. In this context, the prime minister?s efforts to encourage non-coal companies to delve headlong into the mining sector is well appreciated. But to help them steel their nerves, the government should rid the sector of the thicket of innumerable approvals needed from central and state governments to start operations. The interest levels are clearly high, and even field assessments have been made. What?s missing is boldness.
