West Bengal Chief Minister Mamata Banerjee expressed her reservations on Friday about allowing 100% foreign direct investment ( FDI) in the coal sector and asked Prime Minister Narendra Modi to reconsider the decision.
In her letter, she argued that since the global focus was now on renewable energy and sustainable energy sources, FDI was unlikely to attract investors as planned by the Center and would not pave the way for any technology transfer from foreign shores to India.
“This policy can neither bring in FDI, nor can it bring technologies or knowhow which we are unable to access today. The recent trend and empirical evidence clearly showcase the interest of global investors more in renewable energy projects as compared to the coal mining projects. In fact, research suggests that about 100 global financial institutions have divested their thermal coal investments. Therefore, FDI in coal is a far cry”, Banerjee said in the letter.
For example, the $7 trillion BlackRock, the world’s largest fund manager, has decided to divest all of its thermal coal exposure in order to put sustainability at the heart of its investment decisions, while the $52 billion Australian supergiant Hexa – a superannuation fund for health and community service workers, has divested its holdings in thermal coal companies with a commitment to ‘Net Zero’.
In addition, Banerjee argued that FDI in the coal sector is contrary to the spirit of Atma Nirbhar Bharat or self-reliant India as it would undermine the capacity of state-owned Coal India – the world’s largest coal miner with cash reserves in excess of Rs 31,000 crore and earning Rs 27,000 crore net profit in 2018-19. It controls 80% of the country’s coal market.
However, Coal India believes that, as foreign companies enter India and begin domestic production, it will help to reduce imports.
In addition, Pramod Agrawal, Chairman of Coal India, argued that commercial coal mining would not compromise the position of Coal India as the country’s primary coal producer or adversely affect the company ‘s production or profitability.
Coal India, the country’s largest coal resource holder, currently has 447 coal blocks, mostly explored, under its disposal. In addition, 16 additional blocks were allocated to this company – 10 under the Coal Mines (Special Provision) Act and 6 under the Mines and Minerals (Development and Regulation) Act.
The combined capacity of these 463 blocks is close to 170 billion tonnes (BTs).
Banerjee ‘s observations come at a time when workers in Coal India decided to go on a three-day strike beginning on July 2 to protest the decision of the Center to open up coal mining to the private sector.
In addition, the Jharkhand Government also moved to the Supreme Court challenging the Center’s decision to allow private players to hold coal reserves. In its plea, the Jharkhand Government requested that the commercial auction of coal mines be postponed. It argued that the move would adversely affect the vast tribal population in the coal mining belts and vast areas of forest land, and suggested a fair assessment of the social and environmental impact.
