Exclusive: Indian government officials propose break up of Coal India - sources

Thu Dec 1, 2016 9:24am EST
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By Neha Dasgupta and Krishna N. Das

NEW DELHI (Reuters) - Senior Indian government officials tasked by Prime Minister Narendra Modi with reviewing energy security are recommending the break up of the country's coal monopoly, Coal India Ltd (COAL.NS: Quote), within a year.

Attempts to break up the world's biggest coal miner would be met by strong resistance from powerful unions representing the company's employees of more than 350,000. The government backed down from a similar proposal in the face of union protests in 2014.

Around 70 percent of India's power generation is coal based. The country is the world's third-largest producer and its third-biggest importer of coal, which the government wants to change by boosting local coal production.

In a presentation seen by Reuters, government officials recommend that Coal India - with a stock market valuation of $28 billion - should be broken up into seven companies, which they say would make it more competitive and efficient.

The proposal, dated Nov 30, is expected to be presented to Modi soon, three government officials with direct knowledge of the situation said. They declined to be identified because the information has not been publicly released.

Calls to a Coal India spokesman went unanswered.

A source close to power and coal minister, Piyush Goyal, said the ministry would review its stand on Coal India depending on what the prime minister says.

Coal India is the country's second-biggest employer, but critics say it is bloated and inefficient. Its output-per-man shift is estimated at one-eighth of Peabody Energy BTUUQ.PK, the world's largest private coal producer, filed for bankruptcy protection this year.   Continued...

A worker unloads coal from a goods train at a railway yard in Chandigarh, India, July 8, 2014. REUTERS/Ajay Verma/Files