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Business News/ Companies / Coal India workers call off strike

Coal India workers call off strike

Govt agrees to evaluate enabling clause in the ordinance that paved the way for private commercial mining

The Coal India workers outside the firm’s headquarters in Kolkata. The compromise defused a potential crisis that could have disrupted fuel supplies to coal-fired power plants, brought on power outages and increased imports. Photo: Indranil Bhoumik/MintPremium
The Coal India workers outside the firm’s headquarters in Kolkata. The compromise defused a potential crisis that could have disrupted fuel supplies to coal-fired power plants, brought on power outages and increased imports. Photo: Indranil Bhoumik/Mint

Kolkata/New Delhi/Mumbai: Workers at Coal India Ltd, the country’s largest coal miner, called off a strike late Wednesday night, averting a potential power crisis, after the government agreed to evaluate the enabling clause in an ordinance that had paved the way for private commercial mining.

The Bharatiya Janata Party (BJP)-led government agreed to form a panel that will evaluate the clause, a union official said after talks between government officials, led by coal minister Piyush Goyal, and trade union representatives concluded.

“The strike has been called off with immediate effect upon a joint committee being formed under the chairmanship of the secretary, ministry of coal that will look into all the charter of demands of the unions including those against the enabling clause of coal mine auction ordinance that allows private commercial mining," said S.Q. Zama, general secretary of the Indian National Mine Workers’ Federation, affiliated to the Indian National Trade Union Congress (INTUC).

The committee will include members of the five central trade unions—INTUC, Hind Mazdoor Sabha, Centre of Indian Trade Unions, All India Trade Union Congress and Bharatiya Mazdoor Sangh—as well as officials of Coal India and the coal ministry.

It will submit a report at the earliest, but no deadline was specified. The government assured the unions of action based on the committee’s views.

Addressing reporters after the marathon meeting with the unions, Goyal said the unions had misapprehensions about the ordinance. “The government’s intention is not to denationalize Coal India Ltd. Denationalization means ownership and management control goes to private sector. There is no such plan. The present and future interest of CIL and its employees will be protected," Goyal said.

The compromise defused a potential crisis that could have disrupted fuel supplies to coal-fired power plants, brought on power outages and increased imports. It halted 1.5 million tonnes of coal production a day for its two-day duration, causing an estimated total loss of about 400 crore.

According to the Central Electricity Authority (CEA), the country’s apex power sector planning body, as of 1 January, of 100 power projects fuelled by domestic coal, 42 projects had less than seven days’ stock. Of these, 20 had less than four days of fuel.

Half-a-million workers at Coal India and Singareni Collieries went on strike for five days on Tuesday in the biggest show of union strength in recent years, to protest the government move to invite bids from the private sector for coal blocks through an ordinance that also permits merchant mining and sale of coal in the open market.

The five-day strike will be extended to 10 days if the government does not “give up its arrogance", Zama had warned on Wednesday.

The unions say merchant mines would not pay minimum wages or ensure workers’ social welfare, and will be able to sell coal cheaper and make Coal India’s output expensive in comparison.

They also demanded a reduction of weekly workdays from six to five—each of seven hours—plus social security for all workers including contract workers.

The strike came against the backdrop of Coal India’s inability to meet India’s rising demand for the fuel. Behind only China and the US in coal consumption now, India is expected to become the second largest consumer of the mineral by 2016-17, with demand reaching 900 million tonnes (mt).

While India’s power generation capacity grew 60% over the last five years, coal production only expanded by around 6%. The country mined 532 mt in 2009-10, 533 mt in 2010-11 and 540 mt in 2011-12. Production was 557 mt in 2012-13 and 564 mt in 2013-14.

“The joint call of strike by five trade unions at Coal India mines would bring the entire economy to a grinding halt as the country would lose production of over one million tonnes of coal worth about 200 crore per day," the Associated Chambers of Commerce and Industry of India had warned in a statement.

The coal mining strike, had it dragged on, had the potential to hurt industrial production at a time when growth in factory output has been fluctuating widely. In October, the index of industrial production contracted 4.2%, dragged down by manufacturing, which shrank 7.6%.

The mining and electricity sectors grew by 5.2% and 13.3%, respectively, during the month.

“The strike being called off on day two comes as a huge relief to the power sector and to the overall economy," said Debasish Mishra, senior director at Deloitte Touche Tohmatsu India Pvt. Ltd’s energy practice.

“Also, after all this, the coal block auction process continuing un-interrupted and getting over before March 2015 would send a strong signal to the investor community that this government means business."

Out of the 204 coal field allocations cancelled by the Supreme Court in September because of irregularities in their allocation, the government is looking to auction or allocate 101. Of these, 65 will be auctioned and 36 will go to state entities. The government aims to complete the auctions by 31 March.

“We understand that the government has a compulsion following the Supreme Court order about coal mine auction, but they must discuss with us certain basic social security issues of the workers," Zama said.

While the average wage of a CIL mine worker is 40,000 a month, that of a miner in private coal mines is only 7,000, Zama said. With this large difference in employee cost, coal mined by private companies is bound to be cheaper. Consumers will prefer the cheaper coal and demand for Coal India’s output will suffer in the long run, he said.

“This is a sort of indirect denationalization of Coal India by inflicting unfair competition at the cost of workers," he said.

The workers are also objecting to the move to sell another 10% of Coal India’s shares, but workers are ready for a consensus on the issue, he said. “We are aware of the changing times and the needs of reform. Last year, the government reduced the size of disinvestment to 5% and this time too, a workable situation can be reached if the government accepts some basic conditions on job and social security," he added.

During the initial public offering of Coal India, the unions opposed the allotment of shares to workers and they “missed an opportunity of good capital appreciation of the shares", Zama said, adding that this time, INTUC will not obstruct employees from accepting shares if the other demands are fulfilled.

Analysts remain upbeat about the reforms launched by the seven-month-old government led by the BJP.

“The government is firmly going ahead with coal reforms though it doesn’t include any restructuring of Coal India. I don’t think this strike will be able to derail the reform process," said Rakesh Arora, managing director and research head at Macquarie Capital Securities (India) Pvt. Ltd.

“There might be some negotiations and some give and take (between the government and the trade unions of Coal India). Unions historically have used situations like these to extract more benefits for the workers," he said.

Shortage of coal has always been a problem in a country where 60% of power generation capacity is fuelled by the mineral. Of India’s 255012.79 megawatts (MW) power production capacity, 153,570.89 MW is coal-based. The electricity sector accounts for nearly 80% of India’s coal consumption.

Asit Ranjan Mishra in New Delhi contributed to this story.

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Published: 07 Jan 2015, 11:58 AM IST
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