KOLKATA (miningweekly.com) – Consultancy Deloitte, which has been mandated to suggest the restructuring of Coal India Limited (CIL), will submit its final report by the end of May, and is expected to indicate the possibility of the new Indian government breaking up the mining monolith following national elections starting next month.

Deloitte submitted a draft report to the Coal Ministry in February and was scheduled to complete the final report by month end.

Coal Ministry officials said that there had been ‘some delays in the finalisation of the report’, with unofficial indications that the present government wanted to avoid a political controversy over breaking up CIL ahead of the national elections.

Sources said that while at this point it was just conjecture that in its final report Deloitte would recommend breaking up CIL, the incumbent government could not risk any controversy during election time and thought it best to be left to the government that would assume charge in May.

Deloitte was appointed as consultant last year, through a competitive bidding process with the mandate “to review recommendations of various organisations of the Indian government, such as India's Planning Commission, on restructuring CIL, 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”.

Even though the contents of the forthcoming final report were not yet in the public domain, the Planning Commission has been advocating spinning off various operational, wholly owned subsidiaries of CIL, so that smaller operating companies could expand faster and bring in foreign investment participation in the new mining entities through government equity holding dilutions.

However, sources said that in the heat and dust of the election campaign it would not be an opportune time to put the breaking up of the government-controlled company on the agenda.

Such a move could also trigger a political backlash from left-wing political entities, which would invariably point out that a move to restructure CIL would entail violation of the Coal Mines Nationalisation Act,  which permitted only government companies to mine coal, with the exception of coal mining for captive consumption by user industries.

Even a suggestion to restructure CIL at this time would open a hornet’s nest in that 350 000 workers and employees were engaged by the world’s largest coal miner and they were against any dilution of government equity holding in CIL, meaning no government would be willing to jeopardise this vote bank, the sources said.

In September last year, CIL workers went on a three-day strike to protest against any restructuring of the company and disinvestment of government equity holding in the company.

CIL, the world’s largest coal miner, produces 450-million tonnes of coal a year, accounting for over 82% of domestic supplies, and is operated through seven wholly owned mining subsidiaries along with the in-house consultancy subsidiary of the Central Mine Planning & Design Institute.