Government to appoint consultants for restructuring Coal India Ltd

The government has proposed a restructuring of public sector Coal India Ltd (CIL), the sole producer of commercial coal in the country. The ministry of coal has invited expression of interest from consultants for suggesting a road map for restructuring the Maharatna coal monopoly.

The restructuring of CIL has been necessitated by the significant changes in the government's energy policy, particularly after the onset of economic liberalisation in the early 1990s, an official release said today.

Since the establishment of CIL in 1975, there have been significant changes in the government's coal development policy.

The coal sector has now been partially opened to private investment for captive consumption and coal development policy has evolved over a period of time leading to doing away with the administrative price mechanism/decontrol of coal price and distribution, empowerment of performing public sector coal companies, etc.

The restructuring of CIL will also take into consideration the rapidly increasing demand for coal and the need for enhancing coal production. It will also seek to make the coal industry competitive in the rapidly changing economic scenario.

The Planning Commission and a number of high-level committees, including an expert committee on road map for coal sector reforms headed by T L Shankar, had  recommended restructuring of CIL in view of the changed scenario.

The coal ministry has now invited expressions of interest (EoI) for providing consultancy for restructuring of CIL. The consultant will among other things:

  • Examine the recommendations of various committees and the Planning Commission regarding the need for restructuring of CIL;
  • Assess the effectiveness of the current management structure in meeting the objectives of the company enunciated in the articles of association;
  • Assess the need for restructuring of CIL in light of the avoidance of drawbacks inherent in a monopolistic situation and requirements of the Company Law and SEBI regulations and tax laws;
  • Assess the scope for improving competition amongst coal mining companies, which should improve production and marketing with the special emphasis on customer satisfaction;
  • Assess the need for evolving administrative structures, which would promote capability enhancement in individual companies to undertake planning and implementation of innovative technologies;
  • Assess the current financial strengths and scope for better investment plans for enhanced production with suitable administrative control; and
  • Prepare a road map for smooth transition towards proposed restructuring.

Coal India Limited (CIL) was set up as an organised state owned coal mining corporate in November 1975 with the government taking over private coal mines. With a modest production of 79 million tonnes at the year of its inception CIL today is the single largest coal producer in the world.

With 81 mining areas, CIL is an apex body with 7 wholly-owned coal producing subsidiaries and 1 mine planning and consultancy company spread over eight states in India.

CIL accounts for over 81 per cent of overall coal production in India where approximately 52 per cent of primary commercial energy is coal dependent. CIL alone meets to nearly 40 per cent of primary commercial energy requirement of the country.

The company feeds 82 out of 86 coal-based thermal power plants in India, accounting for 76 per cent of total thermal power generating capacity of the utility sector

CIL also fully owns a mining company in Mozambique christened as 'Coal India Africana Limitada'. CIL also manages 200 other establishments like workshops, hospitals etc. It also owns 26 technical and management training institutes and 102 vocational training institutes.