Nirmala Sitharaman’s Coal Reforms Not Really New. How to Ensure Changes Happen is the Real Question

Representative image (Reuters)

Representative image (Reuters)

The intention outlined in the finance minister's announcements are laudable, but the key is moving things on the ground because this is what that matters.

Anil Swarup
  • Last Updated: May 18, 2020, 1:28 PM IST
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Some encouraging announcements were made by Finance Minister Nirmala Sitharaman with regard to the coal sector on May 16 as part of the overall package for economic revival. However, none of these announcements is really new.

Commercial mining was under consideration for a long time and was announced more than a year ago. Coal India has been putting its money in a number of coal evacuation rail projects. Even coal bed methane has been discussed for a while. No one can doubt the necessity of such steps, but the key question is how to make all this happen? There are indeed lessons to be learnt from the recent past, at least in the context of commercial mining.

To get commercial mining going, the government itself will have to get going. There is already a transparent process for auctioning of natural resources. This process can be utilised. However, even after coal mines are auctioned, the bidders will have to be assured that the government or its agencies will not sit on clearances as has been the case in the context of coal mines that were auctioned earlier.

This will need to be taken care of while auctioning blocks for commercial mining. The government will have to act as a facilitator, hand-hold those that win the bids. A clear-cut action plan will have to be worked out. The Project Monitoring Group (PMG) that enabled fast clearances will have to be revived in letter and spirit to ensure that delay in clearances does not frustrate the entrepreneurs.

As coal is embedded in inaccessible area, evacuation was always a key concern. Additional investment is welcome though it is not clear from the announcement where the money will come from. Irrespective of where the funds come from, new projects will take a long time to fruition.

For the immediate future, what needs to be done is to fast-track the existing evacuation projects that are languishing on account of variety of reasons but primarily on account of delays in clearances. Yet again, activating the PMG would help as would an intensive engagement with state government.

Fortunately, the states have now come to understand the value of such projects in terms of additional revenue to them as well as the employment opportunities that such project create.

It is a good step to auction the Coal India coal mines for extraction of CBM but before that is done, the progress made in the already allocated blocks will need to be assessed. The first CBM policy was announced in 1997. It couldn’t make much of a headway. Subsequently, 33 blocks had been allocated over a period of time to various entities under the Coal Bed Methane policy. A policy framework for exploration and exploitation of unconventional hydrocarbons in existing acreages under existing production sharing contracts, CBM contracts and nomination fields was introduced in 2018. Without addressing issues that beset this sector, mere intention to auction the mines will not lead to any substantial outcome.

The intention outlined in these announcements are laudable, but the key is moving things on the ground because this is what that matters.

Disclaimer:The author is former bureaucrat who retired from services in 2018 as secretary school education, literacy. He was secretary in coal ministry. Views are personal

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