No reforms in coal sector during the year

The government's virtual failure to bring about any major legislative changes to open up the crucial coal sector for private participation, coupled with increased resistance to privatisation of public sector units under the mining ministry during the current year put stops to reforms in the sector.

Having privatised Hindustan Zinc Limited, albeit after failing to get a good offer in the first attempt, the coal and mines ministry has succeeded in thwarting privatisation Nalco.

At least for the time being, with the government committing to prescribe fresh guidelines for divestment in natural asset companies.

As such, the ministry witnessed significant changes with Ram Vilas Paswan resigning from the government. Subsequently, Deputy Prime Minister L K Advani was given additional charge of this infrastructure ministry for about three months before Bharatiya Janata Party’s Uma Bharati was moved in as Cabinet minister.

Coinciding with this, was a major bureaucratic reshuffle wherein mining secretary Deepak Chatterjee was replaced by A K Kundra and P K Mishra came in place of N K Sinha as coal secretary, which perhaps led to delays in committed reforms in the sector during the year.

Nonetheless, measures to tone up Coal India, the biggest player in the industry, paid dividends as it improved its profitability. The government also cleared fresh investment in Nalco, although it was put on the block.

The new minister, however, had reservations about the privatisation of the highly profitable public sector units and conveyed her views to the prime minister.

Divestment ministry was forced to call off the due diligence for Nalco after a team of officials from Hindalco, a A V Birla group company, was roughed up while on a plant visit to the company's Orissa facility.

Another PSU slated for divestment, Hindustan Copper, did not make much headway as bidders and government continued to take their own time over the issue of fresh cash infusion needed to clean up the company's balance sheet prior to privatisation.

To make matters worse, the company was yet to fully implement the first round of restructuring.

Neyveli Lignite, another PSU under the ministry, landed itself in a spot of controversy after government sought legal advice on going ahead with its privatisation.

The law ministry put an end to any potential controversy arguing that Lignite was a form of coal and was therefore covered by legislation.

Faced with legal hurdles, government acted quickly by preferring the easy option of deferring a decision on the matter.

Shastri Bhavan mandarins seemed thoroughly uninterested in taking on resistance to allowing private sector a foot-hold in the coal sector through enabling amendments to Coal Mines Nationalisation Act aimed at doing away with public sector monopoly.

-- PTI