Striking Coal Unions are Holding India to Ransom

Wednesday, January 07, 2015
India is the third largest coal importer despite sitting on the world's fourth largest reserves

The unions of Coal India are on a five-day strike to protest Prime Minister Narendra Modi's move to allow private companies to mine and sell coal for the first time in 42 years. The miners fear this will lead to pay and job cuts at state-owned Coal India, where productivity has failed to keep pace with growing demand.

Yet by threatening to prolong their strike that began on Tuesday, the workers are hampering government efforts to reform the coal industry and ease India’s power crisis.

According to PTI, 75% of the country’s daily coal production of 1.5 million tonnes has been affected by the strike.

India is one of the largest producers of coal in the world with more than half of its commercial energy needs being met by this fuel, says BBC News.

The strike has been called by five unions representing some 3.7 million workers employed with the state-run Coal India, which produces 80% of India’s output.

Known for its inefficiency, Coal India digs out about 1,100 tonnes of coal per employee a year, compared with 36,700 tonnes per employee at U.S.-based Peabody Energy and 12,700 tonnes per employee at China's Shenhua Energy, according to industry body ASSOCHAM.

Coal India has fallen short of its output targets for the last six years, forcing India to be the third largest coal importer despite sitting on the world's fourth largest reserves of the fuel.

With a number of power plants running low on coal supplies – 20 plants had less than 4 days of stock when the strike started – there are fears of a widespread disruption in power supplies.

S Q Zama, secretary general of the Indian National Mineworkers Federation, said unions would end the strike if the government assured them that private companies would not be allowed to do any commercial mining for the next six months and that more talks would take place before the industry was opened up.

But the government believes that increasing competition is key to ending India's power shortage. It has approved an ordinance allowing auctions of coal mines to private companies for their own use, as well as allowing commercial mining in the future.

The government came out with its new coal policy after the Supreme Court had in September cancelled more than 200 coal mining licences awarded by successive governments since 1993 since these were awarded in a manner which was "not fair and transparent" and without competitive bidding.

By targeting the government’s move to open the coal sector, the unions are in fact targeting the Supreme Court’s verdict, according to Firstpost.

And by threatening to prolong the strike, the union leaders are blackmailing the government to accede to their demands. With a power crisis looming, they are also holding the nation to ransom.

- Karan Singh

To Learn More:

Brace for power cut as Coal India workers start five-day strike (Economic Times)

Coal India struggles to produce half of normal output amid strike (by Krishna N. Das, Reuters)

Coal India unions are blackmailing the nation. Modi govt must call their bluff (by Vivek Kaul, Firstpost)

Indian coal strike continues after talks fail (BBC News)

Coal India union toughens stand, may extend strike (by Manish Basu, Livemint)


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