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Recently, at a meeting of the Joint Consultative Committee held at the headquarters of the state-owned coal company Eastern Coalfields Limited (ECL), the management informed trade union representatives that salaries for the month of November would not be paid on time. Citing accumulated losses of nearly ₹640 crore, the ECL management stated that it would be able to disburse only half of the monthly wages on 12 December, with the remaining amount to be paid on 22 December 2025. However, statutory provisions mandate that wages be paid at the beginning of the month. Consequently, the trade unions rejected the management’s proposal.

The deteriorating financial condition and continuous decline of ECL have emerged as a grave warning for the entire industrial belt. The Asansol–Raniganj coal mining region was once associated primarily with issues such as land subsidence, illegal coal mining, and the dominance of mining mafias. Today, the crisis has deepened further, with the company itself standing on the brink of financial collapse.

ECL’s Multidimensional Crisis: Beyond Financial and Managerial Failure

The crisis confronting Eastern Coalfields Limited is not merely the result of financial distress or managerial inefficiency. Rather, it is the cumulative outcome of more than a decade of policy shifts, structural changes in the coal market, aggressive expansion of privatization, and the growing grip of organized crime syndicates. A closer examination reveals that the roots of ECL’s predicament run far deeper than what appears on the surface.

A detailed assessment identifies the following key factors behind ECL’s continuing decline:

1. Privatization-Induced Structural Changes

The mining legislation introduced in 2015 has, in effect, rendered the core objectives of the Coal Mines (Nationalization) Act, 1973, largely irrelevant. The consequences have been far-reaching.

1.1 Expansion of Outsourcing

Over the past decade, ECL has outsourced a substantial portion of its coal production to private agencies. The number of permanent employees has steadily declined, while the influence of private contractors in production and transportation has increased significantly. Outsourced operations have been characterized by low transparency, higher costs, and excessive dependence on contractors.

1.2 Captive Mines and the MDO Model

Under the new policy regime, several industrial groups have been granted captive mines to meet their own coal requirements. Consequently, the commercial customer base of public sector undertakings (PSUs) such as ECL has shrunk sharply. Under the Mine Developer and Operator (MDO) model, effective operational control shifts to private contractors, reducing PSUs to nominal operators rather than real owners.

1.3 Revenue-Sharing Framework

Stable revenue mechanisms have been replaced by a production-linked revenue-sharing model. This has undermined financial stability and weakened long-term planning. Collectively, these changes have steadily eroded ECL’s market strength over the past decade.

2. Market Contraction

One of the most critical reasons behind ECL’s collapse is the gradual withdrawal of its major customers.

2.1 Decline in Coal Procurement by NTPC

While NTPC officially cites lower electricity demand as the reason for reduced coal procurement from ECL, the underlying cause lies elsewhere. NTPC increasingly meets its requirements from its own captive mines producing higher-grade coal, rendering ECL progressively redundant.

2.2 Shift to Imported Coal by Coastal Power Plants

Coastal power plants are increasingly opting for imported coal due to its higher calorific value, ease of transportation, and relatively stable pricing. This shift has sharply reduced demand for domestic coal, particularly ECL’s output.

2.3 Captive Mines of Steel Plants, WBPDCL, and Others

Steel plants, WBPDCL, and several other industries now operate their own captive mines and no longer depend on ECL. As a result, ECL’s market has contracted by an estimated 60–70 per cent, leaving the company as a coal producer without a viable customer base.

3. Organized Crime and the “Dada Tax”: The Hidden Destroyer

According to local sources, one of the most damaging aspects of ECL’s crisis is the control exercised by criminal syndicates over coal trucks, sidings, and railway rakes.

3.1 The Local “Dada Tax”

Coal-laden trucks are allegedly forced to pay extortion money to local strongmen. Refusal often leads to detention of vehicles, assault on drivers, or threats. Consequently, traders are increasingly unwilling to lift coal from ECL.

3.2 Extortion at Sidings and Rail Rakes

Private companies sending railway rakes to lift coal reportedly face extortion demands running into lakhs of rupees. Non-compliance results in delayed rakes, blocked siding slots, misrouting of wagons, or prolonged detention. Trade unions allege collusion between mafia groups and a section of corrupt employees. As a result, buyers are fleeing the market, and ECL’s sidings are now perceived as high-risk zones. Sales have fallen to record lows.

4. Coal Adulteration and the Crisis of Credibility

In recent years, repeated allegations have surfaced regarding coal from ECL sidings being heavily adulterated with soil and stones. The reasons cited include minimal oversight in outsourced production, acute staff shortages in quality control, the influence of illegal syndicates, and deliberate mixing of low-grade material to inflate production figures.

4.1 Industrial Reaction

Industrial consumers report severe financial losses due to poor coal quality. As a result, ECL’s market has contracted further, delivering a decisive blow to its credibility and brand value.

Conclusion: A Syndicated Structural Crisis

ECL’s decline is not accidental; it is the outcome of a syndicated structural crisis. The company’s present condition is the cumulative result of flawed policy choices, administrative weakness, unregulated privatization, and the entrenchment of criminal networks. The crisis is neither sudden nor isolated—it reflects long-term policy distortions, market erosion, and crime-driven decay. Any meaningful revival of ECL will require decisive policy correction, stringent quality control, and an uncompromising crackdown on criminal syndicates. Equally important is proactive support and guidance from its holding company, Coal India Limited, which has so far been largely absent. This lack of strategic intervention has significantly contributed to the crisis confronting this once-premium and historically important coal company.

From Nationalization in Law to Privatization in Practice India’s coal mining industry is undergoing a profound structural transformation. While coal remains central to the country’s energy security, the institutional framework governing coal extraction has changed dramatically. Coal India Limited, established as the custodian of nationalized coal resources under the Coal Mines (Nationalization) Act, 1973, today plays a largely marginal operational role, confined mainly to coordination and contract management. Core mining activities—planning, extraction, and delivery—have increasingly shifted to private contractors.

This transition represents a fundamental departure from the spirit of nationalization and reflects a policy-driven move toward privatization in practice, even as ownership formally remains in the public sector.