The coal ministry has convened a meeting with trade unions on Tuesday for a last-ditch attempt to end the stalemate over the 10% stake sale in Coal India to raise about Rs 20,000 crore by March 2014. The stake sale is crucial to meet the disinvestment target and rein in the fiscal deficit within the Budget estimate of 4.8% of GDP.
Despite efforts made by the finance ministry to push the CIL stake sale offer, trade unions representing 3.57 lakh workers have already put up a strike notice opposing it.
“On July 23, all the five unions are meeting coal minister. We have already given a notice of production stoppage if the government goes ahead with CIL disinvestment,” Ramendra Kumar, secretary of Indian Mine Workers Federation, which is affiliated to the left-leaning All India Trade Union Congress, told FE. Coal minister Sriprakash Jaiswal’s office confirmed the meeting.
Though the strike notice does not specify any time frame, any strike at CIL at this juncture will not just lower domestic output but also push up imports. A one-day strike could lower coal output by almost 2 million tonne given that CIL produces four-fifth of the country’s coal output estimated at 557 million tonne during 2012-13.
Already, the country’s coal imports have more than trebled from 41.5 MT in 2006-07 to 135 MT in 2012-13 due to rising demand and CIL’s inability to scale up operations. The coal import bill has also been rising steadily and was at $16 billion last fiscal, adding to the stress on the current account deficit that widened to 4.8% of GDP in 2012-13 from 4.2% in 2011-12. An indefinite strike is sure to choke power supply in major parts of the country. With elections hardly a year away, even a section in the government was averse to support disinvestment to avoid a backlash from the workers class in their constituencies.
After two Presidential directives, the CIL is now bound to supply fossil fuel to power producers, who are adding 78,000 megawatt of capacity in the next couple of years.
Since April, the stand-off with trade unions has prompted the finance ministry to defer its plan to seek cabinet clearance for CIL. If the coal ministry is able to persuade the unions, the finance ministry will move the proposal to the Cabinet. Discussion are also on over buyback of 2% stake by CIL. In order to appease the employees, the government is actively considering allocating an additional 10% of the issue size to employees as it was the case during the IPO in 2010.
“Without the consent of the trade unions, the Coal India offer is unlikely to happen. Given the circumstances, if CIL issue doesn’t materialise, the Rs 40,000-crore of disinvestment target cannot be met,” a finance ministry official said.
At the last meeting with coal minister on May 28, the trade unions expressed “strong reservations” on CIL especially because the government had given an assurance before the CIL IPO in 2010 that there will be no more divestment.
It’s not just CIL that is facing the heat from trade unions. Workers of Neyveli Lignite Corp has staged protest against its stake sale. The Tamil Nadu state government offered to buy through its institutions close to 4% in NLC that the Centre is planning to offer via OFS.
In fact, the 10-point demand submitted by the coordination committee of all trade unions headed by INTUC’s R Sajeeva Reddy included halting of PSU disinvestment apart from changes in contract labour laws and hike in minimum wages.
