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It’s time to get the coal sector out of the pits

Opening commercial mining to domestic and foreign private entities will make open-cast mines more efficient and promote underground mining.

Par Amit Sinha and Deepak Jain

First published on octobre 28, 2014
min


This article originally appeared in LiveMint. The government has an albatross hung around its neck—a huge power deficit fueled by a persistent coal shortage—as it moves to steer India back to the path of high growth. Official data show that power projects worth over 36,000 crore with a total generation capacity of 7,230MW are stuck due to the coal shortage. And as if things could not get more challenging, the apex court has cancelled more than 200 coal blocks allocated between 1993 and 2010. But the government is moving past the controversy. Recently, it allowed the e-auction of coal blocks, which would help private firms in the steel, power and cement sectors through captive use of mines. This is a welcome step that should be part of a wider series of urgent, bold and long-term solutions that include allowing the entry of private entities, including foreign, into commercial mining—a measure the government is considering and should act on with some alacrity. It will increase competition and enhance efficiencies in the sector. Amit Sinha is a partner at Bain and Company and leads its India Industrial Goods and Services practice, specializing in power. Deepak Jain is a principal in the same practice at Bain. Both are based in New Dehli.

This article originally appeared in LiveMint.

The government has an albatross hung around its neck—a huge power deficit fueled by a persistent coal shortage—as it moves to steer India back to the path of high growth. Official data show that power projects worth over 36,000 crore with a total generation capacity of 7,230MW are stuck due to the coal shortage.

And as if things could not get more challenging, the apex court has cancelled more than 200 coal blocks allocated between 1993 and 2010. But the government is moving past the controversy. Recently, it allowed the e-auction of coal blocks, which would help private firms in the steel, power and cement sectors through captive use of mines.

This is a welcome step that should be part of a wider series of urgent, bold and long-term solutions that include allowing the entry of private entities, including foreign, into commercial mining—a measure the government is considering and should act on with some alacrity. It will increase competition and enhance efficiencies in the sector.

Amit Sinha is a partner at Bain and Company and leads its India Industrial Goods and Services practice, specializing in power. Deepak Jain is a principal in the same practice at Bain. Both are based in New Dehli.