Rift between Coal India unions may pave way for govt's stake sale plan

A rift between the five powerful labour unions at Coal India (CIL) is set to clear the way for Prime Minister Narendra Modi's government to complete a stake sale in the state company that is critical to hitting budget targets.

A strike is scheduled to be held on Monday to oppose plans to sell 10 per cent stake in CIL and let private firms to mine and sell coal. Hoever, one of the unions, close to the Prime Minister's nationalist party, says it has the backing of half of CIL's 3,70,000 workers and will not join the strike.

"A strike is not the right process to get your demands met," Baij Nath Rai, president of the Bharatiya Mazdoor Sangh (BMS) trade union, told Reuters.

The share sale could fetch the government a third of its US $9.5 billion annual disinvestment target. Asset sales are running behind schedule, pressuring a deficit target of 4.1 per cent of gross domestic product (GDP) for the financial year ending March 31, 2015.

Officials have marketed the sale in the United States and roadshows will follow this week in London and Singapore. However, no date has been set for the actual launch of the sale, sources with knowledge of the matter said.

The stake sale in Coal India would follow a 5 per cent divestment in state-run Oil and Natural Gas Corp (ONGC), worth US $2.8 billion and slated for December.

SECOND TIME LUCKY

In 2013, the unions thwarted the previous government's attempt to sell a stake in the public sector undertaking. Officials are now counting on PM Modi's clout to push the sale through as part of broader efforts to end the country's coal production crisis.

The unions rarely break ranks. With the BMS staying away, union leaders and company officials told Reuters, the one-day strike is likely to have little impact on CIL's daily output of up to 1.5 million tonnes.

The BMS is part of the same Hindu nationalist umbrella group to which the Modi-led Bharatiya Janata Party belongs.

"The divestment will go through soon and worker unions will come on board. Coal India officials are in talks with them," said a senior government official.

Hoever, the official, who spoke on conditions of anonymity, said the government did not believe in "steamrolling" anyone and was working on other ways to make the strike fail. He did not elaborate.

A senior CIL official said the BJP's election victory in May had boosted the BMS's influence over other unions, helping stem opposition to government measures and curb output losses.

"We don't want to quarrel with the BMS but their leadership is under pressure," said Jibon Roy, general secretary of the All India Coal Workers Federation.

"We oppose divestment, we oppose commercial mining by private firms, and we oppose anything that will lead to the demise of Coal India and bring slavery to India".

(Reuters)