The proposal is expected to be presented to the Prime Minister soon.
A group of senior government officials appointed by Prime Minister Narendra Modi with reviewing energy security, recommends to break up Coal India Ltd (COAL.NS) within a year, reveals in an exclusive report by Reuters.
The group consists of nine top bureaucrats, including one from the ministries of coal, power, oil and mines. They were asked to come up with policy proposals to promote energy and the environment.
According to Reuters, government officials recommend that Coal India –with a stock market valuation of $28 billion- should be split up into seven companies, which they say would make it more competitive and efficient.
Even though the information has not been publicly released, the proposal is expected to be presented to the Prime Minister soon. The ministry would review its stand on Coal India depending on what the prime minister says.
In 2014, government backed down from a similar proposal due to the strong resistance from powerful trade unions and according to the report, the new recommendation will also raise strong protests from unions representing the company’s employees of more than 350,000.
Unions fear restructuring Coal India would almost certainly lead to job cuts and work being outsourced to private companies.
“What happens is that once a big company is broken down, it is easier to control the smaller ones, but if it happens, we will oppose it. We will oppose it through all ways possible, including strike,” D.D Ramanandan of All India Coal Workers’ Federation told Reuters.
India is the world’s third-largest coal producer and around 70 percent of the country’s power generation is coal based. India is also the third-biggest importer of coal and the government wants to change that by boosting local coal production.
The central government wants Coal India to increase production of coal from last fiscal year’s 539 million tons to 1 billion tons a year by 2020. The company is also spending billions of dollars on buying modern machinery to raise productivity.