* Modi government exploring Coal India break up and opening
* But shortages of mechanical shovels, dumpers hitting
* Coal India has missed its output target for years
By Krishna N Das
NEW DELHI, July 25 As Prime Minister Narendra
Modi's government looks to shape up Coal India Ltd for
a potential major restructuring, the world's biggest coal miner
still faces basic problems: it does not have enough mechanical
shovels, dumpers and explosives.
The new government, which has a 90 percent stake in the
company whose total market value is about $40 billion, is
exploring a break up and opening up the sector to foreign
investment to boost output and cut imports, sources have said.
But the firm, which accounts for more than 80 percent of
India's production and employs 350,000, has not met its output
target for years, ensuring the country remains the world's
third-largest coal importer despite sitting on huge reserves.
A failure to boost efficiency could threaten long-run plans
to spin off some of the seven units of the coal miner, a vital
part of the government's reform strategy.
Two units produced less in the last fiscal year than a year
ago, partly due to lack of basic equipment and ageing machinery,
Power and Coal Minister Piyush Goyal told parliament this week.
The minister did not provide data but according to a top
official at one Coal India unit this issue could be cutting Coal
India's annual output by more than 10 percent. The official
declined to be identified due to its policy on talking to media.
Coal India spokesman Vijay Sagar said it was difficult to
assess how much production was affected due to shortages of
equipment or explosives. The latter is in short supply mainly
due to a restriction on moving chemicals such as ammonium
nitrate to prevent it from being misused by extremists.
Nonetheless, resolving equipment issues may be easier to
address than other problems such as difficulties pushing through
land acquisition, delays in getting environmental clearances and
lack of transport facilities.
Coal India produced 462 million tonnes in the last fiscal
year, against a target of 482 million.
Experts said a shortage of mechanical shovels and dumpers,
used in open cast mining, was partly due to Coal India's
procurement policy that forces it to issue a tender for every
big purchase, even for spare parts.
Shortages of critical spare parts, including dumper tyres,
can halt machinery for months, said Dipesh Dipu, a partner at
Jenissi Management Consultants, which advises resource firms.
Coal India's Sagar said though procurement of big equipment
may take time things had improved in the past three years after
the appointment of an external monitor to oversee purchases.
In late 2011, some Coal India officials were charged for
corruption over equipment tenders, leading to heightened
scrutiny of the procurement process. (bit.ly/1ndrmzE)
Coal India's productivity, in output-per-man each shift, was
4.92 tonnes in 2011-12, below a target of 5.54, according to the
last available Planning Commission figures. The global average
is about three times of that.
Productivity in underground mining is less than one tonne.
About a tenth of India's underground output is loaded by
workers, according to the planning commission, which has asked
for it to be fully mechanised by 2017.
In addition, the number of hours a shovel would run would be
around 22 hours a day in the private sector, but just 15 hours
in a public sector firm like Coal India, according to experts.
Minister Goyal said there was scope to improve mechanization
in underground mining and that Coal India was looking at a
consultancy's recommendations on technology and modernising
KPMG Advisory Services' recommendations include more
detailed planning for mines, using international benchmarking
for equipment productivity, refuelling of machinery in the field
and improved training of workers.
($1 = 60.1250 Indian Rupees)
(Additional reporting by Jatindra Dash in BHUBANESWAR; Editing
by Ed Davies)