Panel pitches for coal mine privatisation / OUR SPECIAL CORRESPONDENT

Panel pitches for coal mine privatisation / OUR SPECIAL CORRESPONDENT

Daily Telegraph, New Delhi

23th December 2005

A high level inter-ministerial expert committee on integrated energy policy has recommended that Coal Mines (Nationalisation) Act, 1973 should be amended to facilitate private participation in coal mining.

The committee, set up by Prime Minister Manmohan Singh, released its report today. It said, "The coal blocks of Coal India Limited (CIL) which it cannot bring into production by 2016-17, should be made available either directly or through joint ventures to other eligible candidates for development and bringing into production by 2011-12."

At the same time domestic coal production should be stepped up by allotting coal blocks to the central and state public sector units and for captive mines to notified end users, the report added.

It has also sought to increase the number of private players in the downstream petroleum sector to augment the level of competition in the segment.

The panel has in its reports favoured attracting private investment in the power sector with a regulatory mechanism to ensure a level playing field. It recommended that the government policy for the power sector should ensure that all generation and transmission projects started during the Eleventh Plan and beyond should be competitively built on the basis of tariff-based bidding under a prescribed price cap.

The committee emphasised that the liberal captive and group captive regime as foreseen is the Electricity Act 2003 should be realised on the ground.

India's liberal captive regime would not only derive economic benefits from the availability of distributed generation but also set competitive wheeling charges to supply power to group captive consumers and this would pave the way for open access to distribution networks, the report observed.

According to the panel, coal is the country's most important energy source till 2031-32 and possibly beyond. "India will need to take a lead in seeking clean coal technologies and new coal extraction technologies such as in-situ gassification," the report noted.

It added, "The present shortage of coal can be addressed by encouraging imports, which are also needed from a longer-term perspective. Imports also put a competitive pressure on domestic coal industry to be efficient."

The committee has concluded that imported coal was far more cost-competitive to imported gas for power generation especially along the western and the southern coasts of India.

Such a cost advantage is likely to continue.