FDI in coal will not hurt Coal India: Prahlad Joshi

Privatisation of the coal sector by allowing global firms to bid for coal blocks will not hurt Coal India, according to Parliamentary Affairs, Coal and Mines minister Pralhad Joshi. The government was mulling several measures to liberalise the coal sector, he tells Akram Mohammed of DH. Edited excerpts:

Coal imports have surged in the recent past, despite global calls to shift to renewable and green fuel. What are the causes of the surge in demand?

Coal imports grew from 73.26 million tonnes (MT) in 2009-10 to 166.86 MT in 2013-14 at a compound annual growth rate of 22.8%. However, due to enhanced domestic production, between 2014-15 and 2018-19, the import of coal grew at only 1.9% from 217.7 MT in 2014-15 to 235.3 MT in 2018-19.

Clearly, there is no extraordinary surge in coal imports. In fact, due to the progressive policy interventions of the Modi government, the rise in import of coal is stemmed. Simultaneously, since our government ensured ‘power for all’, domestic coal production touched an all-time high in 2018-19 at 730 MT, up from 550 MT in 2012-13, despite which the country imported coal.

In 2013, the per capita power consumption was 766 units which hit 1,181 units in 2018-19. This will continue to rise further with improved and assured power supply. As such, about 120 MT of coal import is non-substitutable, as 60 MT of high grade imported coking coal is required for metallurgical purposes and another 60 MT is required by coastal Thermal Power Stations (TPP).

There is a proposal to invite bids from global firms for coal mining for the very first time since coal mining was nationalised.

Power demand is rising so fast and steeply that there is enough opportunity for both government and private sectors to produce coal without adversely impacting each other. We are trying to enhance domestic coal production not only from the government coal companies but also from captive coal blocks by allowing private companies to produce coal.

Besides opening coal mining to FDI and private sector, the government is also taking steps for Ease of Doing Business - from exploration to approvals for development of coal market. We are preparing a coal index-based marketing system that will help all the stakeholders in the sector.

What other measures is the Coal Ministry mulling to liberalise the coal sector?

Far-reaching reforms have been undertaken, such as waiving off restrictions on the sale and utilisation of coal from the coalmine, allowing export of coal, 100% Foreign Direct Investment (FDI) in the sector, etc. Few coal mines with sizable reserves have been identified for auction and preparatory steps are being taken for facilitating allocation. Directions have been issued under provisions of Coal Mines (Special Provisions) Act, 2015 for carrying out the auction process with respect to 42 coal mines. The policy allows the allottees of coal mines to sell 25% of actual production in the open rounds of auction.

Won’t such measures adversely affect Coal India?

No adverse impact is foreseen as the demand for coal is driven by rising electricity demand, which will be so high that both would barely be able to meet it. Due to FDI, there is scope for mutual learning as foreign companies – apart from providing employment – will bring advanced coal mining technology and modern planning and management practices, which Coal India can imbibe. These companies, on the other hand, can learn about local conditions and the handling of various issues from Indian Coal companies. In view of these realities, the fear among the domestic players and also the mining labour unions are misplaced.

As the Parliamentary Affairs Minister, do you think there is a need for laws stricter than Article 10 to check defections?

The laws are already in place. In case there is a need to change them, it will be duly evaluated by the Government.