KOLKATA (miningweekly.com) - Indian major Coal India Limited (CIL) was looking to appoint international consultants to oversee the restructuring of its corporate structure and to prepare a roadmap for greater competitiveness in meeting the rapidly increasing demand for coal.

According to an official from the Coal Ministry, expressions of interest from suitably experienced consultants would be invited within the next fortnight and they would be expected to submit a report within three months of the award of the consultancy contract.

The mandate of the consultants would be to review recommendations from various organisations of the Indian government, including the Planning Commission, on restructuring CIL, as well as the current management structure, the monopolitistic operational position of the miner in the domestic market and compliance with new regulations pertaining to company law and competition laws, the official said.

According to a notice issued by the Coal Ministry, the consultants would need to “assess [the] need of evolving administrative structures which would enhance capabilities of subsidiaries under CIL to planning and implementation of new technologies, assess current financial strengths, scope of better investment planning toward increasing production and prepare a roadmap for the suggested restructuring”.

CIL, the world’s largest coal miner, producing some 435-million tons a year, and accounting for over 82% of domestic supplies, is operated through seven wholly owned mining subsidiaries, namely Eastern Coalfields, Bharat Coking Coal, Central Coalfields, South Eastern Coalfields, Western Coalfields, Northern Coalfields and Mahanadi Coalfields. The company also consists of the in-house consultancy subsidiary Central Mine Planning & Design Institute.

In a strategic report, the Planning Commission last year suggested spinning off the CIL subsidiaries into separate entities enabling each standalone company to leverage its respective strengths to increase production.

“The industry would be better served if CIL subsidiaries were to be spun off as separate government public sector companies, which would encourage them to develop their own strategies for coal development, including joint ventures and acquisition of assets overseas,” a Planning Commission report on coal development said.

In fact, the Planning Commission chairperson Montek Singh Aluwalia has taken steps to advocate the complete privatisation of the Indian coal sector and argued that if petroleum, which was much scarcer than coal, was open for investments by the private sector, there was no reason why coal mining should not be opened up to the private sector.

However, Coal Ministry officials said that opening up of the coal sector to private investment was unlikely to form part of the mandate for the consultants and the latter’s role would expected to be restricted to the restructure of CIL and not of the entire coal sector, which was a ‘political minefield’.

Since early 2000, the Indian government had thrice tried to bring in amendments to the Coal Mines Nationalisation Act, which would enable both private and public Indian companies to mine coal in the country.

However, each time a lack of political consensus and strong trade union opposition had scuttled the government’s plans. Currently, CIL, along with the Singareni Collieries Company were permitted coal mining, except in the case of captive mining where a few user industries were allotted coal blocks.