Private coal mining is welcome but Government must ensure it doesn't become a gravy train
Gold mining as is more or less over in any substantive way in India after the exhaustion of the Kolar Gold Field veins by the 1990s and iron-ore mining (mainly in Karnataka, Goa and Odisha) is under a cloud with the Supreme Court raising many questions on both the manner and procedures under which it has been taking place. Yet, mineral development or mining remains an integral driver of the Indian economy. And coal, the fossil fuel which has been mined exclusively by the state-owned Coal India Limited (apart from a few private sector power plants for their own utilisation), is the biggest of them all. All that is now set to change with the Narendra Modi Government announcing earlier this week that Coal India's over four-decade-long monopoly over commercial mining had ended and private players would be welcomed. About time too.
Over two-third of the country's electricity requirements are still serviced by coal-fired thermal plants but the performance of the state-owned coal mining company, despite its monopoly, has been underwhelming to say the least. While it is true that Coal India's production figures increased by over 100 million tonnes over the past five years, it is also a fact that it has consistently missed Government production targets over the same period. This has resulted in a situation wherein despite having coal reserves estimated to be upwards of 300 billion tonnes, India has been a net importer of the fossil fuel because domestic production has fallen well short of demand. In 2016-17, over 20 per cent of domestic demand for coal had to be met through imports, not an ideal situation for the world's third-largest coal producer. Commentators have also pointed out that the quality of coal produced in India is not the best with an average ash content of 45 per cent, which is much higher than the ideal 25 per cent ash content in coal which makes for efficient power generation. The economic and operational logic for the decision to open commercial coal mining to competition with the introduction of private players is, therefore, infallible and very much a step in the right direction.
The issues that Union Minister Piyush Goel, who correctly termed the decision the most significant in the sector after the nationalisation of coal mining in 1973, has to ensure he is on top of as the implementation of this policy plays out are primarily three. First, learning from various apex court rulings and obiter dicta in the Goa iron-ore mining case, he must ensure the principle of a transparent auction process is inviolate. Secondly, since natural resources such as coal and iron-ore are form part of the nation's and its people's mineral wealth, commercial mining operations which, while they have to be conducive for profit for the companies that successfully bid for them, must also have rules of engagement that take on board the notion of inter-generational inheritance in terms of the environment-development balance. This is especially important because much of our coal reserves are to be found in areas which are forested and populated by marginalised communities. Lastly, it needs to be underlined that a robust, expert-led, independent of Government/private sector/NGO regulatory architecture for the sector needs to be in place co-terminus with the beginning of commercial mining. Preparations have to start for it now and not tomorrow.
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