The Supreme Court has cancelled the allocation of 214 coal blocks. So, what is the impact of such a move on the economy and industry, particularly when Prime Minister Narendra Modi is visiting the United States to discuss investments and bilateral trade?
The three critical methods to handle the crisis would be:
- PPP model with Coal India as majority stake holder.
- Private players brought in under the larger umbrella of Coal India; and
- Robust and transparent method for transfer of mineral rights
R P Singh, former chairman, PowerGrid Corporation, said the Supreme Court ruling is a welcome judgment. “Uncertainty is over; power plants languishing for coal will be benefitted. It is time for the Government to act in a very determined and transparent manner,” Singh said.
He added that the Government can, if it wants, act on auctioning coal blocks in 1-2 months.
Singh was participating in #IndiaHangout, a show on Boom News that discussed the impact of the Supreme Court ruling with Singh, Subir Gokarn, director (research), Brookings Institution, India and Prasad Kaporkar, senior director, Crisil.
Gokarn said importing coal to meet domestic requirement was a huge shock to our balance of payments. “Importing coal will continue since we are talking about huge generation of power, and we are going to be dependent on imported coal for a long time.”
Kaporkar said that while the impact on domestic demand-supply may not be very serious due to the SC ruling, the challenge would be the smooth transfer of operations to Coal India and auctioning of blocks.
Singh had a very sure-fire solution to the problem; public-private partnership (PPP).
“We can go for PPP model for coal mining with Coal India as a partner. I can do it a month’s time. Coal India can have 51%, private company can have 49%. And then the Govt should appoint a regulator immediately.”
An interim solution, according to Gokarn, can be private players being brought in under the larger umbrella of Coal India. “The plan – whether it has to be auction or revenue share – for future development has to be decided. And the issue of private mining will have to be addressed with appropriate governance mechanisms.”
While Gokarn said it is time for the Government to put in place a robust system for natural resources, Singh said: “It is now time for the Government to show that it means business.”