Govt is considering breaking up Coal India into 5 Units to Boost Competition

The government is mulling a Finance Ministry proposal to section off state-owned Coal India(CIL) from a single giant entity…

The government is mulling a Finance Ministry proposal to section off state-owned Coal India(CIL) from a single giant entity into multiple listed companies.

This would enhance competition in the coal sector, improve corporate governance and aid in continued divestments of state-owned entities.

The state-run company and the coal ministry are studying a proposal by the finance ministry’s Department of Investment & Public Asset Management to list four of Coal India’s biggest production units, as well as its exploration arm. The development is in an early stage and it was unclear how long it may take.

Narendra Modi’s government sought to sell some state assets to raise funds, Finance Minister Nirmala Sitharaman said July 5, setting a record target of raising 1.05 trillion rupees ($15 billion) in the current fiscal year.

Coal India didn’t respond to requests seeking comment, also press officials at the coal and finance ministries declined to comment.

The four units — Mahanadi Coalfields, South Eastern Coalfields, Northern Coalfields and Central Coalfields — account for more than three-fourths of the company’s output, while constituting less than half of its workforce. The fifth unit would be Central Mine Planning & Design Institute.

India’s state run coal giant has been unable to meet growing demand despite abundant resources. Imports of the fuel surged to a record over the same period.

Shares in the miner, which has a market cap of about $20.7 billion, are heading for a fifth straight year of declines. The government holds almost 71% of the company.

India, the world’s second-largest coal consumer after China, depends on Coal India for about 83% of the domestic production. The miner has consistently fallen short of production targets, while an overworked railway network has hampered transport of the fuel.

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