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MAY 27 2014

High-voltage merger of power and coal ministries

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 27th MAY 2014

The Narendra Modi government's decision to merge the three ministries of coal, power and non-conventional energy will ensure coordinated decision-making and faster implementation of projects.

The combining of the coal and power ministries would benefit both the industries as there would now be fewer instances of the relevant policies being at cross purposes.

In the past, conflicts have occurred between the power and coal ministries. For instance, when Coal India was asked through a presidential directive to sign fuel supply agreements with power stations to feed combined capacity of 72,000 MW, the coal ministry protested, saying these obligations are onerous and impractical. The power ministry, on the other hand, has been keen that the PSU doesn't violate the directives

There are many committees in the coal ministry for decision-making, practically leading to avoidable delays. Merging the power and coal ministries would do away with the need to have these committees and could expedite linkage allocations for power plants.

However, it is important that environment clearances for both coal mines are fast-tracked too, given that around 13,000 hectares of coal-bearing areas are awaiting green clearances.

At a time when the government is all set to commence competitive bidding for coal blocks, if the coal and power ministries function under a single head, the bidding process could get a leg-up.

It wasn't clear whether the petroleum ministry would also be merged with the proposed power and coal ministry. Many analysts have been recommending combining ministries of power and petroleum given that currently they are often found to be at variance over crucial policy questions. The dispute over proposed hike in gas price (which the petroleum ministry is in favour of and the power ministry is wary of) is one example. The two ministries have differences over setting the priorities of gas allocation.

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