Privatisation of Coal Mining

On 12 Dec 2014 the Lok Sabha passed the Coal Mines (Special Provisions) Bill, 2014 and the Bill is now in Rajya Sabha for consideration. This important Bill was approved by Lok Sabha by just a voice vote in a great hurry without referring to the relevant Standing Committee. The Bill is to replace the Coal Mines (Special Provisions) Ordinance, 2014 promulgated by the central government in October 2014 to enable auctioning of the cancelled coal blocks. The ordinance was brought in due to the Supreme Court decision on 24 September 2014 cancelling 214 coal blocks allocated by the both UPA and NDA governments over the years to various capitalists and to a few public sector companies.

The Modi government claimed that the purpose of the Ordinance and the subsequent Bill is to ensure that there is no shortage of coal and power in the country due to the cancellation of allocation of coal blocks. Their real aim is to throw open coal mining to big Indian and foreign capitalists which was reserved only for the public sector companies after the nationalisation of coal mines in 1973. The government used the Supreme Court decision as a pretext to amend the Coal Mines (Nationalisation) (CMN) Act 1973 and the Mines and Minerals (Development and Regulation) (MMDR) Act 1957 Act so that Indian and foreign capitalists and their companies would be able to mine coal for their own use as well as sell to others.

Till now only companies with end use projects in notified sectors like power generation, steel and cement production could mine coal only for their own use. The ordinance has inserted Section 3A in the CMN Act to enable join ventures formed by the central and state governments and their companies, and any company, to carry on mining operations in India "in any form either for own consumption, sale or for any other purpose", in accordance with the licence granted by the state government. Thus coal mining has been thrown open to private sector.

Indian and foreign big capitalists have been demanding privatisation of coal sector and allowing private sector to mine and sale coal for many years. Coal consumption has been steadily rising the in the country. In 2013-14, only 570 million tonnes of coal was produced against the requirement of 740 million tonnes. So 170 million tonnes of coal, nearly 20 percent more than last year, had to be imported. Rising coal imports and inability of public sector coal companies to meet the demand is put forward as justification to allow production of coal by private sector. 

The past attempts to modify the CMN Act were strongly opposed by people and the coal mine workers. A bill for changing the CMN Act was even introduced in the Rajya Sabha in April 2000 but could not be passed.

The privatisation of coal sector is now being pursued in two ways. The shares of Coal India are being sold gradually to big capitalists. Modi government has already announced plans to sell further shares of Coal India in the next few months. On the other side, the private sector was first allowed to mine coal for its own use and now with the new 2014 Bill it will be allowed to mine for its own use and as well as to sell to others.

Coal, petroleum oil and gas are the major source of energy for the people of the country. Bulk of electricity production in the country is based on coal. A large number of working people use coal for cooking and heating. Petroleum oil and gas sector has already been thrown open for profiteering by big capitalists. Now the coal sector is also being thrown open for profit making which is bound to lead to increase in price of coal and electricity.

The Ministry of Coal has already announced the Coal Mines (Special Provisions) Rules, 2014 for the auction of coal mines. The auction of the first lot of coal blocks is scheduled before the end of Mar 2015. Modi government wants to ensure the Bill is passed by both the Houses well before the date of the auction. 

Privatisation of coal sector is opposed by coal mines workers as well as all the trade unions. A proposed strike on 24 Nov was withdrawn when the central government assured that it will consult the trade unions before introducing the Bill in the parliament but the government did not talk to the representatives of workers before getting the bill passed in Lok Sabha, using its majority in numbers. The workers and their unions have now announced 5 days strike from 6 Jan 2015 to oppose the privatisation and denationalisation of coal sector.

Mazdoor Ekta Lehar wholeheartedly supports the just struggle of the workers of coal mines and calls upon all the working people of the country to join them to oppose the privatisation of coal sector. They must demand immediate halt to the auction of coal mines. All coal mines must be taken back from capitalists and the production of coal must be stepped up to minimise the dependence on imports. 

Coal is a natural resource and belongs to the people of the country. It cannot be handed over for private profit to the capitalists, whether Indian or foreign. Coal is a strategic energy source for the society. Its production needs to be planned as per the needs of the people and for that purpose the adequate resources need to be made available. This requires reorienting the economy. The goal of the economy has to be satisfaction of the needs of the people instead of maximising the profit of the capitalists. Only when the political power is vested in the hands of people, the economy will work in the interests of people. This is what people have to fight for to stop all the on-going attacks on people.

Coal Mining in the country

The coal mining in the country is governed by the CMN Act and the MMDR Act. The CMN Act was enacted by the Indira Gandhi government when coal mining operations were taken over by the government from the capitalists in the 1970s; the MMDR Act vests the authority of giving out mining rights on state governments.

Coking coal mines were nationalised in 1972, followed by nationalisation of non-coking coal mine in 1973. The Coal Mines Nationalisation (CMN) Act, enacted in 1976, terminated leases of capitalists except those producing iron and steel and allowed them to mine coal for their captive use. The process of privatisation of coal mining began in 1992, when143 coal unused blocks of Coal India and Singareni Collieries were offered to capitalists for coal mining for their captive use. The Act was amended in June 1993 to include power as end use. In March 1996, cement and in July 2007, coal gasification and liquefaction too were notified as specified end uses. Captive mining was opened up to 100 per cent FDI under the automatic route in Feb 2006.

The Mines and Minerals (Development and Regulation) Act was amended in Sept 2010 to make competitive bidding applicable to all minerals. In Feb 2012, the UPA government notified auctioning of coal mines.

Coal Mines Auction Plan

The ordinance classifies mines and their assets in three schedules. The first one includes all 204 mines deallocated by the Supreme Court recently, the coal bearing land acquired by previous allottees of these mines and the mining infrastructure. The second schedule comprises 42 mines mentioned in the first one but which are producing coal and for which the apex court has allowed a six-month grace period. The third schedule includes 32 mines that are in various stages of development. The government is empowered to include more mines in this list.
While all capitalists can bid for Schedule-I mines, bidding for the second and third category will be open to only those engaged in production of power, cement and steel. "In relation to Schedule-II coal mines (operational coal mines), the successful bidder, which was a prior allottee, shall continue coal mining operations after the appointed date in terms of the approved mining plan," said the ordinance. Successful bidders will be allowed to supply coal to each other.

Public sector companies will be allowed to form joint ventures with Indian and foreign capitalists. This will be yet another way privatisation of coal sector.


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Defeat Privatisation    Coal India    Jan 1-15 2015    Struggle for Rights    Rights    


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