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Wednesday, 22 August 2012 17:28
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If BJP is ok with commercial mining, go for it

At the heart of the 2G scam, the electricity grid collapse, the R1.86 lakh crore ‘coalgate’ scam, and so many more crises is an acute shortage of supplies—of spectrum, of power supplies, of coal for producing power. So, notwithstanding the losses computed by the CAG and vigorously disputed by so many, including our lead columnist Surjit Bhalla in the adjoining column today, the real solution lies in being able to fix the shortage of supplies. So far, while the UPA has moved on allowing auctions for captive users such as power and steel plants, this took six years—the PM proposed this in June 2004 and the amendments to the MMDR Act got gazetted in September 2010. And during this six-year interval, the government allotted mines which were the subject of the CAG report.

So, here’s the good news: the principal Opposition party, the BJP, is more than ready to back the UPA, should it so desire, to allow commercial mining as well. In 2000, the NDA had brought a Bill, the Coal Mines (Nationalisation) Amendment Bill, 2000, to allow commercial mining, subject to certain conditions such as the size of the mine, its location and so on. And since the Bill was introduced in the Rajya Sabha, it remains a live Bill even though two governments have changed since. And what’s more, the Standing Committee—the Bill was first referred to the one on industry and later the one on energy—okayed this. In its report, tabled in Parliament in August 2001, the Standing Committee, the coal ministry’s annual report says, “recommended that the Bill be passed to facilitate Indian private companies to explore and mine coal and lignite without the existing restriction of captive mining”.

While even captive miners can, theoretically, achieve the same result of hiking production, experience shows this is far from happening. Indeed, most of the companies allocated captive mines have not even begun production. A good way to examine just how important getting in commercial miners of repute is, is to juxtapose India’s experience with that of Australia which allows commercial mining. In 1980, India had 11.5bn tonnes of iron ore reserves and Australia 15bn; in 2005, India had 13.8bn and Australia 40bn! Not surprising when you consider that, in 2010-11, Australian miners invested $5.9bn in new exploration and $56bn in new capital expenditure on existing mines—the $174bn Australia had invested in mines in April 2011 was a 31% hike since October 2010! To give another example, as compared to the 12 kimberlites (rock formations in which diamonds may be present) discovered by various government organisations in India between 1980 and 2004, Australian mining firm Rio Tinto has found 22 kimberlites between 2000 and 2003. So, whatever the result of the BJP-Congress fight on the CAG report, if we’re able to bring in commercial mining, the end outcome will benefit the country.

 

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