KOLKATA (miningweekly.com) – The Indian government’s plan to sell another 10% equity stake in Coal India Limited (CIL) has hit a roadblock owing to choppy market conditions and opposition from trade unions.
All trade unions represented at CIL have claimed that the proposed sale of a further 10% equity stake would take total public holding in the company to 30%, which would change the character of CIL to a private sector company. Workers were opposed to this.
“All trade unions operating in CIL will shortly chalk out a course of action of protest to prevent the government from selling any further equity to private investors. It would be very difficult for the trade unions to cooperate with the CIL management if the government goes ahead with disinvestment,” Indian National Mineworkers’ Federation secretary-general S Q Zama said.
“The government [has not] consulted the workers on [the] fresh sale of equity in the company,” he added.
The Coal Ministry had already appointed merchant bankers to sell an equity stake in CIL, which was expected to provide government with about $3-billion in revenue.
In January, the trade unions embarked on a strike in protest against the previous round of CIL equity divestment. The strike was, however, called off following government assurances that the public sector character of the mining company would not be changed and that “creeping privatisation” of CIL would be ruled out, a trade union office bearer pointed out.
Another strike at CIL had not been ruled out, although the trade union leader said industrial action would be considered only after leaders of all five trade unions, representing 350 000 workers at the company, came to an agreement.
Meanwhile, given the crash in global markets and diminishing investor appetite, the Coal Ministry was apprehensive about the response the equity sale would evoke. However, no decision had been taken yet to scrap the equity sale, since it was critical to the government’s stated objective to raise $11-billion through disinvestment of equity in government-owned companies, a Ministry official said.
The Coal Ministry was well aware of global investors' disinterest in coal stocks in the face of growing concern over the environment and climate change, which could impact the response of foreign investors to a CIL equity sale, he said, citing the example of the Norway government’s pension fund’s recent sell-off of holdings in CIL.
Given the market uncertainties, the Ministry was uncertain about whether domestic financial institutions alone would be able to fully subscribe for the full 10% of CIL's equity on offer.
The disinvestment of 10% equity in Indian Oil Corporation, the largest government-owned refiner-marketer, just scraped through on support from domestic financial institutions, while retail investors subscribed to just 18% of the equity on offer.