The Government which had been initially serious about segregating Coal India ltd's (CIl) eight subsidiaries into independent entities as part of its endeavour to improve the Maharatna company's productivity, seems to be having second thoughts about implementing the move as it now feels that doing so would endanger the very identity of the country's largest producer of fossil fuel.
According to sources privy to the information, the terms of reference (TOR) for the prospective consultant - which the Coal Ministry is in the course of hiring and which will prepare a report on suggesting measures to improve CIl's performance - have been revised to say that it should come up with alternatives other than segregation of the public sector undertaking (PSU).
Official sources told The Pioneer that the ministry has indicated in the TOR for the prospective consultant that it should think of other ways which can improve CIl's productivity and efficiency. Considering the fact that CIl is a listed entity, the measures to be suggested by the consultant also need be market-friendly, sources said.
The consultant is to be finalised within a month and the report to be prepared by it is to be completed and submitted to the ministry by end of this year, they added. The ministry had received applications from firms like McKinsey, KPMG, Ernst & Young, Deloitte and Crisil for the consultant's post and of these one entity would be short listed within a month.
This sudden change of heart on part of the ministry could also be attributed to Coal Minister Sriprakash Jaiswal's recent comment that he was not enthused by the idea of segregating CIl. The minister had said a few days back that while nine consultants have been short listed for suggesting a future roadmap for improving CIl's productivity, he was not in favour of splitting the Maharatna company.
The Planning Commission and various high-level panels, including the Expert Committee on Road Map for coal sector reforms - also known as T l Shankar Committee - had recommended restructuring of CIl keeping in view the rapidly increasing demand of coal and the need for enhancing production as well as to make the coal sector competitive.
While the Shankar panel had proposed to the Government to commission a study to assess “the need for restructuring of CIl in light of the avoidance of drawbacks inherent in a monopolistic situation, and to prepare a road map for smooth transition towards proposed restructuring”, it was the Planning Commission which had suggested segregating CIl's subsidiaries into separate entities so that each one of them could pursue its own goals, amid growing supply deficit of coal.
The Plan panel has stated that India's total coal production at the end of the 12th Five Year Plan (2012-17) would be 795 million tonnes against total coal demand at 980 million tonnes. Though the ministry initially kept the segregation theory in motion, a view within Shastri Bhavan mandarins was that doing so may deprive CIl - which is the largest producer and supplier of coal within the country - of its identity as all its subsidiaries would emerge as competitors in their own right.
At the same time the Government wants that CIl should not be labelled as a monopolistic organisation which takes undue advantage of it being the sole producer and distributor of the fossil fuel - of which it had been accused of during its imbroglio with the Power Ministry over price pooling and quality of coal issues. These reasons, sources said, forced the Coal Ministry to modify the TOR prospective consultant.
Coal India has eight subsidiaries - Bharat Coking Coal ltd, Central Coalfields ltd, Eastern Coalfields ltd, South Eastern Coalfields ltd, Western Coalfields ltd, Northern Coalfields ltd, Mahanadi Coalfields ltd and Central Mine Planning and Design Institute ltd (CMPDIl).