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Jonathan Rowland
Editor
T
hat India has a problem supplying enough coal to its
power and other industrial sectors has become
something of a truism. Last month came further proof,
as stockpiles of coal at power plants hit another low,
this time the worst since mid-2012 when a huge blackout left
hundreds of millions of people without power. Reuters reported
that half of the country’s power plants were down to a week’s
worth of supply and that generating levels were down – at one
point 7 GW below peak demand.
Meanwhile, Coal India (CIL), the state-owned behemoth that
monopolises coal output in the
country, announced that it had
again missed a production target
(although it did record an 8% rise
in profits). The company mined
108.3 million t in the three
months to June against a target of
113.01 million t. Its goal of
507 million t for the year to April
2015 seems a long way off.
So far, so normal. But then
India’s maverick and activist
Supreme Court – a body with
remarkable power and
willingness to tackle corruption
– entered the stage. Previous
actions of this formidable institution include scrapping
telecoms licences, forcing the resignation of the head of the
powerful Board of Control for Cricket in India (considered
untouchable until the court proved otherwise) and ordering
buses in Delhi to switch from diesel to compressed natural gas.
Now the court has the coal industry in its sights. At the end
of last month it declared the allocation of 218 coal mining
licences to private companies to be illegal. These licences were
handed out for free between 1993 and 2010, as part of an effort
by the Indian Government to boost coal production. A 2012
report from the Comptroller and Auditor General of India had
already done much to expose and criticise this process, claiming
the government had missed out on billions of dollars in income
as a result. The court may now bring the whole rotten edifice
crashing down.
At the time of writing, the justices were still pondering
what sanctions to take. Outright cancellation of the licences
– as happened in the telecoms industry in a similar case two
years ago – would devastate India’s already fragile power
industry, starving it of the coal
it already finds itself so
woefully short of. The resulting
blackouts would destroy
investor confidence in the
country, setting back the hopes
of boosting economic growth
raised by the election of
Narendra Modi as prime
minister. It is to be hoped that
the court finds a better
alternative.
The drama also highlights
the desperate need for Modi
and his new minister of coal
and power, Piyush Goyal, to
reform the industry. A repeal of the Coal Nationalisation Act,
which states that only CIL can mine coal for sale on the open
market, would be a good start. It is this law that ultimately
led to the allocation of coal blocks for captive mining and the
sorry mess the country now finds itself in. Such a step will
not be easy: Modi’s BJP party does not yet control India’s
upper house of parliament and will not get the chance to take
it for another couple of years. But that doesn’t mean he
shouldn’t try.
OUTRIGHT CANCELLATION OF
THE LICENCES WOULD
DEVASTATE INDIA’S ALREADY
FRAGILE POWER INDUSTRY,
STARVING IT OF THE COAL IT
ALREADY FINDS ITSELF SO
WOEFULLY SHORT OF.
