CIL's move to firm up coal supply commendable

There is some good news coming in from the power sector, at long last. Coal India ( CIL), following directives from the power ministry and Prime Minister’s Office, has firmed up fuel supply agreements for 146 power plants with 65,000 MW of generation capacity, which is more than a fourth of the total installed base. It is commendable indeed, as the biggest impediment in power currently is the sheer lack of firm coal supplies, never mind our large proven reserves of the mineral.

This is a positive development in two ways. The recent economic slowdown had largely been brought about by lethargy in governmental decision-making. It had seemed that the government is incapable of getting anything done. The fuel supply agreements offer reassurance that the powers that be can yet deliver and resolve matters quickly.

Besides, the development augurs well for the power sector, to provide quality power at competitive rates including in rural areas, to boost cold chains, agro-processing, manufacturing and myriad other value-adding activities. In tandem, we need to purposefully stem and curtail the massive distribution losses and revenue leakage of state power utilities, to shore up and plough back investments in what is a hugely capital-intensive sector.

In parallel, we need to junk the anachronistic policy of public sector monopoly in coal and hive off CIL subsidiaries for a more complete market with multiple suppliers seeking custom. Further, we need to mandate routine beneficiation of coal at pithead, including of the dry kind, to drastically cut down on the fuel spent by the Railways on hauling coal, about 40 per cent of which is shale, rock and non-combustible material in its current unbeneficiated form.

This would free up capacity for the Railways to carry higher value freight as well.