An attempt at consulting the Planning Commission has proved a minefield for Coal India Ltd.
In mid-2012, the company approached a top Plan Commission official to help improve its outsourcing model by co-opting the private sector in tackling crucial hurdles of land acquisition, rehabilitation and resettlement of project affected, securing environment and forest clearances and so on. Currently, all these processes take CIL seven-eight years to complete.
CIL was encouraged to outsource post the Rajmahal extension project experiment in Jharkhand. When the contract was awarded to Essel Mining, two years ago, CIL had cleared only half the hurdles. The private miner agreed to take on the responsibility of getting the clearances and still mine coal at a rate cheaper than what it costs CIL.
CIL thought this was the way to go if it had to step up coal production by nearly 40 per cent in the current Plan Period ending in 2017.
Though CIL could have explored the joint venture model, it preferred the MDO (mining developer and operator) route because, one, the JV model is now under the apex court lens. Two, it could be a direct violation of the nationalised status of the industry. Also, entrusting private entities the task of land acquisition is sure to create a political storm.
But the concession agreement that CIL was working with had several inadequacies. CIL had already had a few legal run-ins with Essel even before it started production from Rajmahal. CIL was also worried that unless plugged the loopholes could lead to a flood of litigations in future contracts.
Seeing the need for a water-tight document, CIL sought the Planning Commission's help; the Plan panel suggested that the offer be made a little lucrative so as to draw private sector participants to take up such projects with added responsibilities.
Even as these consultations were on, the government decided that this is another opportunity to bring the private sector into coal mining. At an international mining summit in Kolkata on December 6, Coal Secretary S.K. Srivastava announced that the MDO model was the way to go, both for CIL and the country.
The big push came a couple of months ago when the Principal Secretary to the Prime Minister held a meeting to set milestones for award of contracts.
After a couple of hurried meetings, last fortnight, the Plan panel readied the Model Concession Agreement for a final view by CIL. Obviously unhappy with the Plan panel’s proposal, a CIL source said: “We have no clue how the proposal was turned on its head. We wanted MDOs to share administrative and regulatory risks. If we are to negotiate that on our own, why should we need MDO that too for 25 years and with such binding clauses?