Mining the coal man over minestrone

It's a muggy May afternoon in Kolkata, and around 40 in the shade. We're glad to slip into the cool confines of the Oberoi Grand, the ‘Grand Dame of Chowringhee'.

The delicate fragrance in the hotel adds to the sense of coolness. We head for the La Terrasse restaurant. Our guest, we have been told, is always bang on time.

Sure enough, on the dot at 1 p.m., Narsing Rao, the 54-year-old Chairman and Managing Director of Coal India, comes in beaming.

He's refreshingly casual. There is no general factotum trotting beside him. Settling down, he waves away the menu proffered to him and says he's fine with anything, as long as it's vegetarian.

We order some minestrone soup and a large platter of kebabs and, while we wait for our food, we ask him about the career he's left behind.

“You've burnt your bridges with Andhra and the IAS?” we ask him. Beams. “Yes, I have quit, I could have remained in the IAS, but it sends a wrong signal that I may want to go back; for that reason I said no. So, I've closed all options, it's either here or nowhere!”

Was it a tough call to make, quitting the premier service? “Well, I mulled over it for a long time, then finally went for it... my wife still can't accept it!” he says, laughing.

Rao's bureaucrat career in Andhra Pradesh saw him serve across the State till he wound up as Chairman of Singareni Colleries, where he earned his spurs as an able manager, upping production by 42 per cent in a span of five years.

Earlier, he was on deputation to the UNDP, where he was posted in Rome for a while and then in Kuala Lumpur and Bangkok and even Yangon for a couple of years. “I was never keen on a Central government job, I was happy in Andhra,” says Rao, a bit wistful.

All things coal

Over soup and kebabs , we mine him for information on all things coal. Given Coal India's dismal record in producing coal, we ask him if privatisation is an option to step up output.

After all, we tell him, only 40 million tonnes of incremental production has resulted in the Eleventh Plan period — enough to fuel 8,000-10,000 MW of power only as against the capacity addition of 20,000 MW added during 2009-11.

He smiles again, beatifically. We wonder if it's a futile question, but he explains: “In 2006, 80-odd captive blocks were allotted but not a speck of coal was produced, except some 3-4 million tonnes by two-three state utilities.

There are many reasons: some of the blocks may have gone to non-serious promoters or they may not have invested. Some serious investors are facing problems, including unavailability of an evacuation facility.”

We tell him that power producers are crying themselves hoarse about availability of coal and ask if CIL improving output will solve the problem, given that the Railways never has enough rakes to move the coal.

“Yes,” he says emphatically, “I am working on it (rake availability). Surely, things are better — a shade better than last year. Otherwise, I have no business to hang around; I should leave Kolkata and do some agriculture, if I do not have results to show after one year!” says Rao.

While in the first two months of this fiscal, CIL posted production growth, Rao says it's too early to say if CIL is on target. “I only wish that the trend continues. Today we have a six per cent growth. But till September, I cannot say if we are doing better than last year. Wait for four more months,” is his exhortation.

The main course comes, a simple meal of roti and dal to keep it quick, and there's a brief lull in the conversation as everybody helps themselves.

Raking it up

We ask him the burning question: if it's just a problem with rake availability, why can't the problem be fixed with the Railways? After all, coal alone contributes 400 million tonnes of the 750 mt of railway freight in a year.

“Railways is also a monopoly like me. Their policy is ‘you pay I will collect'. (laughs); they will not give any concession on railway freight to coal and iron ore (two of the biggest revenue churners).”

But, we point out, CIL, among India's wealthiest companies, is sitting on cash reserves of Rs 55,000 crore. Why can't it just fund the laying of railway tracks, if funding is an issue with the Railways?

Rao says that just three railway tracks can solve the nation's coal problem! “We just need three tracks of 100 km each in Odisha, Jharkhand and Chhattisgarh to solve coal availability issues for the country. Funding is not a problem. This will give an additional Rs 10,000 crore freight revenue for the Railways and Rs 2,000 crore more for each of the three States as royalty.

Some of these projects are pending since the Ninth Plan! Till it happens I am aiming at some low-hanging fruits (to up coal availability).”

Cool head for hot issues

Will imports be the solution then for now?

Rao puts that in perspective, pointing out that CIL's average sale price is Rs 1,200 a tonne.

Aggregating duties, the sale price at the pit head is approximately Rs 1,500 a tonne. So, there is a clear advantage of Rs 2 per kilo-watt hour (or unit) if producers use domestic coal (for power generation).

“Problem with the power sector is distribution companies cannot pass on the cost of imported coal. Today they may be paying Rs 6,000 a tonne for coal. Five-six years later they will not have enough money to buy even my Rs 1,500 a tonne of coal,” elaborates Rao.

What lessons does he draw from his stint at managing Singareni? Rao says that Singareni is fairly well managed and he identified and focused on real issues constraining production.

“I wouldn't say that those were revolutionary initiatives. All you need is to focus on it and then you may have to take some risk to make it happen.”

Our time with CIL's Chairman is coming to an end. As we tuck into some mishti doi , we ask him if he's been put in a hot seat given the burning issues that confront the coal sector.

“I came here knowing all the issues. I know the challenges. I am going ahead with a very ambitious plan. I might face a huge amount of disappointment and frustration. I am prepared for that.”

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