India’s Industry Body FICCI Suggests Privatizing Coal Sector

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India’s industry body, the Federation of Indian Chambers of Commerce and Industry (FICCI), has suggested privatization of giant miner Coal India Limited (CIL), while expressing concern about the country’s energy security, reports The Hindu.

The report says that FICCI president RV Kanoria has called for radical reforms to break the monopoly of state-owned CIL.

FICCI is the largest and oldest apex business organization in India. FICCI has been encouraging debate, articulating the private sector’s views and influencing policy. FICCI enjoys an indirect membership of over 250,000 companies from various regional chambers of commerce.

The report quoted Kanoria as saying that the power sector continued to be throttled due to lack of availability of coal supplies, inadequate investments in coal exploration and high international spot prices. Energy shortages were crippling the industry even as the demand-supply gap was widening.

It is important to allow privatization of CIL; to sell it to different private players to make the sector competitive and profit-oriented; and to break CIL’s monopoly, Kanoria was quoted as saying.

His comments come at a time when most power projects in the country are grappling with severe coal shortages, mainly on account of lower domestic production.

Coal is the primary source for power generation in India, accounting for more than half of India’s power generation. Coking coal is also the main fuel for steel mills and cement makers. Besides industrial demand, coal is the basic fuel for many Indians in rural parts of country.

Obviously, the power sector is the biggest consumer of coal in India. CIL has been unable to meet the domestic demand. As a result, entities are importing coal at higher prices from overseas. The coal demand from power, steel, and cement sectors is so heavy that even CIL has acquired some coal blocks overseas and is still looking for more.

The demand/supply gap of coal has already crossed an alarming limit and the gap has further widened to 161.5 million tons in the last fiscal year.

To be continued in Part Two.

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