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TN can leverage NLC’s strengths...
Over the past few weeks, there has been massive resistance to the proposal of the Union Government to divest 5 per cent of the shares of the Central PSU, the Neyveli Lignite Corporation Ltd.

Political parties, particularly the Communists, along with the employees’ unions controlled by different political parties, were joined by the ruling AIADMK to oppose the move. The workers’ unions also struck work at a time when the state has been suffering a severe power shortage.

In the present divisive political climate, the Union Government is not in a position to go for big- ticket divestments. Finance Minister P Chidambaram has been content to go for the divestments funded by government owned financial institutions like LIC. In this process, the higher market value of the shares could be monetised but the basic principle of widening ownership is lost.

NLC, set up in early 1960s, was the first large integrated pithead power project based on lignite deposits. German technology through Rheinbraun was accessed along with sophisticated mining equipment through handsome soft loans through the German Development Bank, KFW at 0.75 per cent interest p.a. with repayment spread over 40 years and an initial moratorium of ten years.


NLC helped take power to all TN villages

The first two decades were marked by acute shortage of lignite caused by inadequate capacity of mining equipment. For years, output of lignite was less than 3 million tonnes against the projected 6.5 MT per annum, plunging the corporation to mounting losses. Available lignite was used for feeding the 600 MW power plant equipment supplied by USSR. These sturdy machines, liberally under-rated, proved to be a boon to Tamil Nadu, supplying copious power at low cost. The northern districts of the state, including Chennai metro, benefited immensely. The state extended irrigation facilities taking agriculture to great heights and also helped TN emerge as the first state to take electricity to all villages.


The Yegneswaran magic...

Under the dynamic leadership of S Yegneswaran, supported by the then Union Minister of Steel and Mines Mohan Kumaramangalam, NLC’s mining capacity was substantially expanded in the 1970s. NLC pushed behind years of losses. Over the last three decades and more, NLC has been among the most profitable of Public Sector Undertakings.

The state government, under the Dravidian parties, has not been effectively leveraging the strengths of NLC. The expertise and resources available could have been utilised to build large capacity power plants in other parts of the state in quick succession. Many major expansion schemes of NLC did not take off. The most notable one was the large project at Jayamkondan. NTPC, established in the mid 1970s, received all attention and spread its activities all over the country and today accounts for an installed capacity of 41,184 MW, more than sixteen times the capacity of NLC. Alert mining ministers from the north are today working on tapping the resources of NLC for large projects in UP and elsewhere.

Sadly the state, instead of working on similar lines, has been dissipating its energies in relatively non-issues like the five per cent divestment, which can have little impact either on management or control. The state, whose finances are not in great shape, can certainly work on much larger and more valuable issues than on this tiny piece of divestment.

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