Interview: Piyush Goyal

‘There is no intention to denationalise Coal India’

Print edition : February 20, 2015

Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New and Renewable Energy. Photo: Ramesh Sharma

An open cast pit of Jindal Steel and Power Ltd at Sarasmal village near Raigarh, Chhattisgarh. This belongs to one of the 204 coal blocks whose allocation was cancelled by the Supreme Court on September 24. Photo: Rafiq Maqbool/AP

ON September 7, 2014, Piyush Goyal, Minister of State (Independent Charge) for Power, Coal and New and Renewable Energy, described his first 100 days in the post as a “baptism of fire”. According to him, he inherited a crisis-ridden sector where power outages are the norm and coal block allocation has been arbitrary.

Load shedding and power cuts are still common in many States; the common man has to pay a high tariff because of power theft and financial as well as technical losses; coal and gas supplies are not enough to fire the plants; lack of adequate infrastructure makes power transmission from surplus States difficult; and the potential for renewable energy is yet to be fully exploited.

The Bharatiya Janata Party-led National Democratic Alliance government has been talking about affordable 24×7 power to all households and industrial and commercial establishments, and adequate power to the agriculture sector. Critical to achieving this is continued fuel supply, which is a challenge following the September 24 verdict of the Supreme Court to cancel the allocation of 204 coal blocks of the 218 that were made between 1993 and 2010 while giving breathing time until March 31, 2015, for the mines that were in operation. This left Goyal and his team with just six months to work out a foolproof reallocation mechanism, so that the country did not face a severe crisis.

In this conversation with Frontline, Goyal said that the negotiations with the five trade unions to convince them to withdraw their strike were a learning experience. The Centre’s intervention to end the coal workers’ strike averted a power crisis. The second and final day of the strike (January 7) called by workers of Coal India Limited showed peak supply shortage at 5,204 MW—almost the entire requirement of Delhi. The strike caused a coal production loss of an estimated Rs.300 crore, with over 75 per cent of the 1.5 million tonnes a day output taking a hit. Excerpts:

How do you justify the government’s decision to adopt the ordinance route for coal block auctions, when it could have been done through rules and notifications?

We could not have done this via rules and notifications for the simple reason that there was existing infrastructure associated with the illegal allotments.These had to be acquired to be given in the auction or fresh allotment. Otherwise, we would have been in an anomalous situation where the block whose mining rights had been cancelled by the Supreme Court had reverted to the government and was now being offered through a transparent process. But the winner of the block under fresh auctions would not have been able to work on that mine because the land and mining infrastructure remained with the prior allottee. We would have got no bids in such a situation.

The ordinance was an absolute must to acquire the land and associated infrastructure and give it along with the mining rights.

Second, the ordinance was required because the Rajya Sabha neither passed nor rejected the Bill [the Coal Mines (Special Provisions) Bill].

We cannot create a situation where coal is in short supply and power tariff shoots through the roof.

With the ordinance, a concern among the trade unions was that the government was moving towards denationalisation of Coal India. How were you able to convince them?

During my talks with the unions, I found them to be sincere about the workers’ well-being and about the company. At various levels we [Coal India management, Ministry officials] have tried to address their concerns. But, probably when they finally met with me and I explained to them in the simplest manner, I think they went back completely satisfied.

There is no denationalisation of Coal India. There are always certain sections who try to misguide the workers…. But after meeting with me they were completely satisfied.

In fact, the meeting was a great learning experience. Some of the union leaders gave excellent suggestions on how to increase production in Coal India. And now I have it from the union that they will participate in this one-billion-tonne coal production target by 2019-2020.

What about the unions’ concerns on allowing commercial mining?

They are fully satisfied that our intention is neither to denationalise Coal India nor to create at any point of time a situation where workmen’s interests are affected.

But, at the same time, we must remember that there are users like small households (poor) which still buy 3-4 kilograms of coal at Rs.20-30 a kg. Should they not get it at Rs.2?

Look at the lakhs of red brick kilns which end up going to the black market to buy coal at a high cost. I am told they are under threat of closure because of the high costs. There are refractory manufacturers who do not get coal, small boiler units, small- micro units, who don’t get it.

Now, Coal India is a monopoly which is a monolith. It cannot satisfy small needs—[for example,] if somebody needs 1,000-2,000 tonnes monthly. We need someone to take care of all these small requirements. If some mines are opened up, after all the end-use is met—existing power plants, steel and cement, and all captive power plants. I think it is a great service.

The revenue from such activities will also help the development of the eastern States and mineral-bearing States.

The ordinance protects officials from future litigation. What was the trigger?

There was no trigger. We have made the situation so transparent that there is no discretion left with any of us. There is zero discretion in the system, it is all completely process-driven. But, historically, this sector is one where even officers don’t wish to work in the department because of the legacy.

There have been instances where officers with impeccable integrity have been questioned when in and even after leaving the Coal Ministry. Several times they have been questioned on procedures. Therefore, it is incumbent on the political leadership to recognise that officers who are working under a lot of stress should not face embarrassing situations unless mala fide intention is proven. I don’t want cynicism and scepticism to come into the Ministry.

Your Ministry happens to be more exposed to criticism of the Comptroller and Auditor General, the government auditor.

Now everything is transparent and in the public domain, and everything is done through electronic auction, so where is the scope for CAG issues?

At the monitoring level, are you satisfied with the system in place?

We are continuously deliberating on how to improve the whole process. What better, what next, what could happen?

Your critics say that in the ordinance the fine print is in the rules. It is seen that by capping the bid price, the government is artificially controlling the power tariff at the consumer end. Do you agree?

Surprised! There can be no such control from my side. What we have done is that instead of allowing prices to shoot through the roof and increase power tariffs across the country, we have this unique methodology where the Coal India price (where there is a scope of profit, CIL is making profit) is what we have capped the bid price at. We have asked people to bid downwards, to see at what lower costs they can produce. I am allowing the efficient producer to come forward. The entire benefit is being passed on to consumers.

So, how does Coal India work on its price? Is it market-linked?

That is a legacy issue. Maybe I should have a committee to study the entire pricing structure of Coal India. We haven’t yet changed the price. I am happy to agree to your suggestion that Coal India should look at its pricing structure and maybe rationalise it a little.

Prices of imported coal have softened. If this situation continues, do you feel that it can be to India’s advantage?

At no point of time do I feel that imported coal will work except at two or three plants that are in the coastal areas. While we had this major power requirement and shortage of coal, I did a study and found that there were very few plants dependent on imported coal or were situated on the coast.

A boost to the power sector is linked to fuel—coal. What are you doing for coal linkages?

Coal linkages that are already given are not being used fully. My effort is to get Coal India to ramp up production and start providing the full linkages.

You have said we have enough power generation capacity and that it is the transmission infrastructure that is an issue. What is your view now?

We have a lot of capacity that is either stalled, stressed or underutilised. We have capacities that are old. Both of these we need to get back into operation—some by ensuring adequate supply of coal and others by replacing old equipment with new ones. The effort is to raise the plant load factor to 90 per cent. Why should they be operating at 65 per cent? We can easily increase generation by 50 per cent from the existing capacities by this.

Besides, by restarting the stalled or stressed plants and having a renewed thrust on renewable energy, we can easily double the current electricity generation while keeping costs low and strengthening the ability of the States to take supplies.

When do we expect complete grid connectivity to happen?

By 2019, this country will be power surplus and every home and industry will be connected with the grid. My focus is fuels, transmission and distribution, and renewables. Simultaneously, we are working on the next stage of generation capacity.

How much is the Finance Ministry with you as far as the financial package is concerned?

The greatest support for my Ministry has been from the Finance Ministry, besides the Ministries of Mines, Steel and Environment. I can only say that all of us are working together to achieve the 24×7 power supply to all targets.

Are all States on board in the matter of financial restructuring packages for the distribution companies?

We have to work with each State, find solutions for each individual State. The States will have to take their own initiatives to sort out their own internal problems.

Prime Minister Narendra Modi recently said that just as one could decide which mobile service provider one wanted to use, the same will be the case in power supplies. Does it mean that private participation will be allowed in discoms as well?

The discoms will be one supplier, but there will be different distributors who will be in the market. So, there can be a situation where there will be a state discom and NTPC and other private players competing for power distribution.

Will there be cross-subsidisation of renewable energy?

You may find some bundling with power produced from coal. You may find occasions where renewables will be a compulsory generation obligation. The country recognises that we need greater clean energy.

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