New Delhi: Coal India Ltd (CIL), the world’s largest miner of the fuel, will use satellite technology to prevent shipments from being hijacked amid a shortage that has hit supplies to thermal power projects across the country.

The move by the government to curb theft in transit comes as the United Progressive Alliance (UPA) administration fights charges of inefficiency and corruption.

Coal minister Sriprakash Jaiswal. Photo: Bloomberg

“We’ve given directions to install GPS (units) and made it time-bound," Jaiswal said. This will be implemented for all consignments, so that “we get to know the status of rail loading and road loading", he said.

It is estimated that at least a quarter of CIL’s 431 million tonne (mt) production is stolen in transit, says Arun Kejriwal, director of Mumbai-based equity research firm KRIS. This means, in the black market, customers end up paying 25-35% more than spot market rates, he said.

The industry has had little success over the years in tackling organized crime in mining areas. Illegal activities include the theft of coal and explosives, besides illicit extraction of the fuel. Apart from mines being located in isolated and tribal areas, the lack of socioeconomic development, combined with exploitative labour practices has created a fertile ground for the Maoist insurgency to flourish, further disrupting supplies.

The latest steps are small ones considering that bigger reform is needed, such as establishing a coal regulator and holding auctions for coal blocks, but they’ll still be good for CIL, Kejriwal said.

“Call it baby steps or face-saving measures, but this is something positive," he said. “This will help the image of the company as also its balance sheet."

India faces an acute shortage of coal—it has 256 billion tonnes of reserves, of which around 455 mt is mined in a year, and at least 100 mt more is needed from foreign markets.

Jaiswal said cooperation from the states would be critical in curbing theft. “No one can tell how much coal is diverted, but yes, corruption happens. In CIL, it happens at an individual level. It is not that the full company is corrupt," he said. “The biggest thing in fighting corruption is the cooperation from state governments. Until the state government and police cooperate, how can we fight corruption?"

The ministry is also planning another key reform to boost service standards—customers will be supplied with crushed coal measured by the globally used “gross calorific value" rather than the archaic “useful heat value", currently used by CIL.

Crushed coal does away with the need to sift through useless rock and the changed measurement standard will help customers to pay more accurately for the grades of coal purchased.

This was decided at a meeting held by Jaiswal a month ago that was attended by CIL chairman N.C. Jha and the heads of the company’s seven subsidiaries.

This isn’t the first time CIL is seeking to track shipments to rein in theft. It had previously planned a so-called operator-independent truck despatch system “to enhance the operational efficiency of large opencast mines" for movement of coal by road. This was never implemented.

The decision on curbing pilferage came after the cabinet secretariat wrote to all ministries asking them to take steps that will “boost" their “image…and have a direct impact on corruption".

To bridge a perceived trust deficit, the UPA constituted a group of ministers headed by finance minister Pranab Mukherjee to consider measures that could be implemented to tackle corruption.

“Once the GPS (units) are installed, any diversion from a route can be tracked. GPS will also be installed at rail sidings. Pilferage of coal happens mostly when transportation routes are changed to offload coal," a ministry official said on condition of anonymity.

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