Half a PPP = no PPP PDF Print E-mail
Wednesday, 11 April 2012 00:15
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Contractors are not PPP, Plan panel feels it’s OK for CIL
The government seems to have no end to piecemeal solutions for the country’s coal crisis. After many weeks of confusion, the Prime Minister’s Office (PMO) told Coal India to import coal if need be, but to deliver coal to the power plants that needed it, apparently oblivious of what this would do to Coal India or to power prices in the country. When Coal India’s board refused to fall in line, a directive was issued to it, once again without any thought given to what this would do to the sharply worsening investor sentiment in the country. The latest to join this group offering partial solutions is Planning Commission Deputy Chairman Montek Singh Ahluwalia who has suggested Coal India rope in Mine Development Operators (MDOs) who could be entrusted with developing Coal India’s mines for it, and the relationship between them and Coal India could be regulated through Model Concession Agreements the Planning Commission has executed so successfully in other areas. While it is not certain if global biggies like BHP and Rio Tinto will want to come in as contractors to Coal India, some of the smaller mining firms may well do so. While that sounds like a great solution to Coal India’s current problem of not being able to raise its output, there are several problems with it. One, the ministry insists Coal India’s poor performance comes from the no-go demarcation, in which case the solution offered is of little help. Two, if it was that easy to fix a PSU by outsourcing work, all PSUs ranging from Air India to BSNL would have been revived a long time ago. Three, if what we need are top-class players, why are we going for a lesser solution? Four, the CAG report on the coal scam points out Coal India gets a major part of its work done by outsiders anyway.
The larger point that needs to be stressed if that if the country had no problem ending ONGC/OIL’s monopoly in oil exploration and drilling, why can’t the same thing be done in the coal sector, more so since India’s oil reserves have grown significantly as a result. And if the government is keen to be seen as protecting Coal India, it could use the same solution used in the oil sector—allowing private players in but with the proviso that Coal India would own a 30-40% stake in each venture, which would ensure the government would get a significant share of the discoveries made. Controls on prices, or some on which sectors are to get priority (as happens in the case of natural gas for instance) are tools that are available to cushion end-use sectors. Half a PPP, at the end of the day, equals no PPP.

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