Senior government officials tasked by Prime Minister Narendra Modi with reviewing energy security are recommending the break up of the country’s coal monopoly, Coal India Ltd., within a year.
Attempts to break up the world’s biggest coal miner would be met with strong resistance from powerful unions representing the company’s employees of more than 3,50,000. The government backed down from a similar proposal in the face of union protests in 2014.
About 70 per cent of India’s power generation is coal-based. The country is the world’s third-largest producer and its third-biggest importer of coal, which the government wants to change by boosting local coal production.
In a presentation seen by Reuters, government officials recommend that Coal India, with a stock market valuation of $28 billion, should be broken up into seven companies, which they say will make it more competitive and efficient.
The proposal, dated November 30, is expected to be presented to Mr. Modi soon, three government officials with direct knowledge of the situation said. Calls to a Coal India spokesman went unanswered.
A source close to Power and Coal Minister, Piyush Goyal, said the ministry would review its stand on Coal India depending on what the Prime Minister says. Coal India is the country’s second-biggest employer, but critics say it is bloated and inefficient.
Under Mr. Modi’s government though, production has risen sharply as environmental and other clearances to develop mines have been fast-tracked. The company is also spending billions of dollars on buying modern machinery to increase productivity.
The government wants Coal India to increase production of coal to 1 billion tonnes a year by 2020 from about 539 million tonnes in the fiscal year that ended in March.
Mr. Modi was exploring a breakup of Coal India before taking office, Reuters reported in 2014, but the government put the idea on the back burner following protests by unions.
Unions fear restructuring Coal India would almost certainly lead to job cuts and work being outsourced to private companies. “What happens is that once a big company is broken down, it is easier to control the smaller ones,” said D.D. Ramanandan of the All India Coal Workers’ Federation, which he said, represents more than 1,00,000 workers of the company.
“But if it happens, we will oppose it. We will oppose it through all ways possible, including strike.” — Reuters
