Coal Crisis

The current unprecedented coal crisis, occurring for the second time within a span of hardly six months, has caused widespread power cuts across the country, imposing far reaching economic costs. In that context, the Centre has been trying to put the blame entirely on the States, whereas it is the central agencies which are squarely responsible for anticipating the electricity demand at the national level, coordinating adequate coal supplies to support the power utilities in meeting the summer demand surge and planning the necessary logistic support.

Had the Centre fully appreciated the crucial role played by the States in taking electricity far and wide across the country to promote all round economic development, especially in ensuring the food security of the nation and understood the reasons for the financial problems faced by the State-owned DISCOMS, partly attributable to the Centre’s own imprudent policies, it would have desisted from castigating the States and, instead, adopted strategies that would pre-empt a crisis situation of the kind faced today and helped tide over the problem collectively in a more constructive manner.

While the CIL, the SCCL and the Railways, the three premier public sector companies, are doing their best to ramp up coal production and transport coal to mitigate the present mismanaged coal-power crisis, it is several domestic private coal developers, expected to produce coal in line with a predetermined plan, who have let down the country miserably. On the other hand, many of these very same private companies, having overseas coal mines from which coal is exported to Indian power utilities, have brazenly exploited the shortage by charging astronomically high prices for coal imported into India. The prices quoted by them bear no relationship whatsoever to the cost of production and, therefore, it amounts to nothing less than outright, anti-national profiteering.

In the past, some of these companies were found prima facie to have over-invoiced coal exported by them to India and the Enforcement Directorate (ED) had undertaken investigations which they tried to hamper. Apparently, they enjoy considerable political patronage.

At the same time, the Centre’s insistence on the CIL is paying high dividends to the government, and the Centre also depriving the company of its own Greenfield coal blocks by auctioning the same to private companies, has hindered CIL’s own efforts to enlarge its coal development programme, thereby hurting the public interest. In a way, the present coal crisis could be indirectly attributed to this; as otherwise, the CIL would have had a wider shelf of coal projects from which it could have delivered much larger quantities of coal more efficiently, compared to its private counterparts.

On the other side, having created an artificial coal-power crisis, the Centre has resorted to extraordinary ways to promote the interests of the private companies, those exporting coal to India from their overseas mines, by issuing unduly regressive directions to the State power utilities to import a minimum quantity of coal at any cost, irrespective of the price charged, to bridge the coal supply-demand gap, created through sheer mismanagement and lack of anticipation and planning. This has imposed a huge cost burden on the State utilities.


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Vol 54, No. 50, Jun 12 - 18, 2022