DNA Edit: Tackling energy crisis

Last year, an acute shortage of coal had virtually paralysed private power plants and state-run units while the nation stared at an energy crisis.

Coal India, the government-patronised behemoth, was partly to be blamed for the situation. At that point, it was clear that India’s growing energy needs could only be met with radical reforms in the coal sector.

Six months since the crisis, the Union Cabinet has decided to open up the coal sector to commercial mining by private entities. It will put an end to Coal India Ltd’s monopoly and enable power producers as well as cement and steel manufacturers to access fuel more efficiently.

To put things in perspective, the coal scam during the UPA regime that resulted in the Supreme Court ordering the cancellation of 204 coal block allocations, had put a lid on much-needed reforms. But the latest move by the Centre, touted as “the most ambitious coal sector reform since the nationalisation of this sector in 1973”, should remove bottlenecks in terms of production and supplies, while minimising government control over natural resources.

Having said that, the checks and balances in the new system, such as ascending forward auction — in which the bidder offering the highest price per tonne of coal to the state government where the mine is located, gets the contract — will ensure transparency and protect national interest.

For far too long, the Centre has had its hands dirty, labouring over extractions, supply and price determination of coal, when its role should have been supervisory. As the coal sector opens up, “with no restriction on the sale and/or utilization of coal from the coal mine”, foreign companies will find the deals lucrative.

With increased competition among players, prices will be well under control, thus benefitting consumers. A word of caution: The government should be watchful about illegal mining fuelled by corporate greed.