De-nationalisation of coal sector will boost growth: Montek Singh

Planning Commission deputy chairperson Montek Singh
Ahluwalia has argued for de-nationalization of coal sector as a step to boost
growth, which as per finance ministry's mid-term review has dipped below 6%. “Coal India's monopolistic position has not helped,” Ahluwalia
said.

Back in 1973, coal sector was nationalized by setting up
Coal India Limited, a holding company for all coal reserves in India, with a
fear of mafia taking over the important mineral produce.

Since then, the private participation in coal sector has
been miniscule.

In mid-1990's, the government allowed private companies to
mine for captive purposes only after the linkage for iron and steel, power and
cements sectors was established. Still over 95% of coal mines are with Coal
India or its subsidiaries.

The planning panel has said that 23,000 MW of power capacity
added in the 11th Five Year Plan cannot be utilized because of absence of coal
linkages. There is about 122 million ton gap between the demand and supply of
coal by Coal India.

Ahluwalia also said that he believes that coal should be denationalized
and private players should be allowed to commercially exploit the natural
resource.

“If private players are allowed in other valuable
natural resources such as gas and petrol, why not in coal?” he asked.

Coal is the source for about 70% of India's electricity need
and is the only nationalized fossil fuel.

“I strongly support the move to de-nationalize coal
mining in India as the move will accompany competition and bring in the much
needed latest mining technology,” said partner and
head for energy-infrastructure at leading advisory firm.

De-nationalization could also attract global mining firms
into coal mining in India he further added. 

On the other hand, critics of the proposal say that it would
lead to huge increase in coal prices resulting in higher electricity cost for
common person.

Experts cautioned that coal block allocation to private companies
delinking it from captive usage may open up possibilities of speculative
trading in the fuel.

The Planning Panel, however, says that Coal India has not been
mine enough from its 475 coal mines despite the company being Rs. 26,000
crore cash surplus.

The coal ministry officials, however, blame the environment
ministry saying environment approval for 128 coal blocks are pending with the
ministry.

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