NEW DELHI, Jan. 10 (UPI) -- India has decided to deregulate its coal industry to encourage private investment and solve the coal production problem, which is not keeping pace with country's rising energy demands.
India heavily relies on coal -- it's most plentiful energy source -- to power the country and is a major global producer.
But as the economy of the second most populated country of the world grows, so does its demand for power, further straining its coal reserves.
"Deregulating the coal industry could help solve the problem of coal production, which has not been keeping pace with the growing energy requirement of India. It would also help invite private investment in this sector," said Harsh Gupta, the president of the Indian Coal Industry Association, a non-governmental body dealing with the coal industry.
Deregulation of the coal industry was one of the key demands of the association's recently concluded annual conference. Coal experts expressed serious concern over the fate of India's coal sector and recommended the government act immediately to save the industry by deregulating it and inviting private participation.
Production of coal in India has gone down over the year creating scarcity for its coal-based power plants. Half of the country's power generation plants are currently running at half capacity and in need of a coal supply.
"That is what happened when the iron and steel industry were deregulated. Private players started producing as much as the state. Private players have come to stay," Gupta said while pleading his case for coal industry's deregulation.
Coal is the main source for 70 percent of India's power generation. India's economy is booming, increasing the demand for power and the need for more coal.
It is world's third largest coal producer after China and United States.
"The coal industry will keep on playing an important role in fulfilling the increased energy demands of the country in the near future also. Depleting recoverable coal reserves, air pollution and increasing competition are the key issues before the Indian coal industry," said M S Srinivasan, India's energy secretary.
State-controlled Coal India Ltd., has sole control over country vast coal reserves. In a bid to invite domestic private players and foreign direct investment, the federal cabinet committee on economic affairs last week gave its approval to deregulate the ailing coal industry ending the monopoly of Coal India Ltd.
With the initiation of the deregulation in the coal sector, international and domestic power companies have shown interests in investing in Indian coal sector. Most of the private investment offers have come in the form of the companies vertically integrating to cater to their own coal requirements.
The new guidelines of the coal ministry have opened up the way for up to 100 percent foreign direct investment in some selected areas of the country's coal sector. The coal ministry has said it would take further measures to attract foreign and domestic private investment in this one of the most important energy sector.
The government's move to deregulate the industry was welcomed by the country's private power majors like Reliance Industries, Essar and Tata Power. They expressed hope that quality and sustainable supply of coal to their power plants could now be made possible.
"It (deregulating) was a long-pending demand of the industry. Now, the government has done it. It would go long way in creating a competitive market and would not only revive the coal industry but help the country achieving its energy security goal," said D S Rawat, an official of the Associated Chambers of Commerce and Industry, a key Indian trade body.
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