Coal Crisis: Government needs to have flexible policy, static policy would not work, says ex coal secretary PC Parakh

“The problem of the ongoing coal shortage is not the one which started today, it’s a long-drawn problem,” points out former coal secretary PC Parakh in an exclusive interview with Business Today.

Since the last few days, the shortage of coal has become a huge obstacle in the power generation. Many power plants have issued warnings that power plants are on the brink of closure. The former coal secretary explains how we reached here.
 
According to Parakh, who retired from the bureaucracy in 2005, the delay in the entry of private players in the coal sectors is one of the big reasons that is fueling the crisis. “Once I came in the coal ministry, the situation was pretty similar [to] now, [and] the country was reeling under shortage of coal. At that time, I went to Manmohan Singh, who was the Coal Minister, my proposal to open the entry of private players in coal sector was rejected owing to some political compulsions of the party,” he said.

Recently, the Ministry of Coal allowed captive mines -- which are basically mines that produce coal solely for its own use -- to sell 50 per cent of their annual output in the open market. The objective behind relaxing this norm was to ease pressure on power plants that will also aid in import substitution of coal.

Throwing light on the removal of distinction between captive and non-captive mining, Parakh said, “In my personal view, any restriction is not required even in captive mining. So, if blocks have been given for captive use, allow people to sell and ramp up production as much as they can. And allow coal to be sold to whoever they want. Why do you put any kind of limitation and restriction?”

Parakh, who is famous for recommending a competitive bidding process in captive mines to the then Coal Minister, Dr. Manmohan Singh, argues that the policy of the government must be flexible enough to take care of a situation as it develops.

“Also, there is always a distinction between Coal India and private industry. If you're really privatising, then you should give some very good quality coal mines to private players and not give only those which are rejected by Coal India. By and large in the past, the system was to give some smaller blocks, whose quality is not very good to the private players and good coal mines were reserved for coal India,” he pointed out.

He further argues that good quality coal blocks should be given to the private players. Though, according to him, this is still not happening.

He also believes that the barriers in implementing the Land Acquisition Act, due to many complexities, is one of the problems the coal sector has been reeling with for long.

“In addition to this, we have a serious problem, [which is] the availability of land, [and mainly because] the Land Acquisition Act has been made so complicated. Ideally, I think the government should acquire land, get governmental and forest clearances, and then put up those mines that will enable private sector to quickly get into the business,” he said.

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