Coal India looking at taking all its eight subsidiaries public

NEW DELHI: Coal India Ltd (CIL) is looking at taking all its eight subsidiaries public as prices of the fossil fuel soared after power demand rebounded from the pandemic, a government official aware of the development said.

The coal ministry has approved a draft Cabinet note to sell 25% of state-run CIL’S consulting unit, Central Mine Planning & Design Institute, and Bharat Coking Coal Ltd to the public. The other subsidiaries that may go public are Central Coalfields Ltd, Eastern Coalfields Ltd, Mahanadi Coalfields Ltd, Northern Coalfields Ltd, South Eastern Coalfields Ltd, and Western Coalfields Ltd.

“There is a plan that Coal India units offload its shares in the market. It started with two companies. The process is underway. The board has passed (the resolutions for the stake sales),” the official said, requesting anonymity.

The government wants to take CIL’S units public at a time a global fuel shortage has catapulted coal prices to a record. Coal use has been surging worldwide in recent months after years of decline because of rising power demand as economic activities gather pace after the easing of the pandemic and supply disruptions caused by Western sanctions on Russia, a major miner, for invading Ukraine.

Analysts said coal companies may garner investor interest in the near term because of red-hot prices. However, the fuel’s longterm future appears bleak as environmental compulsions and strict climate targets may force investors to shun them.

“Coal and other fossil fuels seem to be in favour now amid the geopolitical tensions and the supply constraints. But, in the years ahead, investors are unlikely to buy these shares. Both foreign institutional investors and domestic corporates are slowly moving away from investment in fossil fuel-based companies,” said an analyst with a consulting firm who did not want to be named as the firm advises companies in the coal sector.

Queries sent to the coal ministry and CIL remained unanswered until press time.

According to an annual action plan prepared by the coal ministry, the cabinet note for the listing of Central Mine Planning & Design has been submitted for approval after consultations with other relevant ministries, and a draft note for Bharat Coking Coal’s listing has been sent for inter-ministerial discussions.

Experts said the Centre’s plan is in line with its target of privatising or selling stakes in noncore businesses.

For FY23, the government has set a disinvestment target of ₹65,000 crore. However, the listings of Bharat Coking Coal and Central Mine Planning & Design may spill over to the next fiscal year. IPOS of state-run companies have been a major source of non-tax revenues for the government.