Fixing coal and electricity production is a nuts-and-bolts issue that is unlikely to make headlines. However, news reports and underlying data indicate that the coal and power industry is being turned around by the National Democratic Alliance government. The importance of coal and electricity in India cannot be stressed enough. The below data from The Wall Street Journal indicates that 61 per cent of India’s electricity needs come from coal. And India underperforms compared to other developing countries when it comes to providing electricity access.

Given, the importance of coal and electricity, one needs to rewind to the years before 2014 to understand the gravity of the situation. The 2012 power blackouts were one of the world’s largest electricity crises with about 600 million people affected across India. These blackouts happened despite India having the fifth-largest coal reserves in the world. Even as of June 2014 (a month after the NDA government came to power), experts were predicting large-scale power blackouts. Here is an excerpt from an article from June 2014:

The prolonged heatwave and drought worries have an even darker lining, as it emerged that thermal power plants across the country are fast running out of coal. A massive blackout of the kind last seen in the grid collapse of August 2012, when 600 million people were left without electricity, is now a possibility if nothing is done quickly.  Of the 100 power plants monitored by the Central Electricity Authority (CEA), as many as 38 are left with only a week’s worth of coal to burn, while 20 have as little as four or even zero days of coal stocks, sources say.

The reasons for such a crisis situation were manifold, including a stagnation in coal production. The below table from Zimlon shows that coal production in the five-year period from 2009 to 2014 showed only a six per cent growth, while electricity generation capacity increased by 73 per cent, which led to a mismatch between supply and demand.

A lot of this could be attributed to bureaucratic bottlenecks within the Coal India public sector undertaking and the general slow moving nature of ministerial decision-making. To compound matters, any new increase in coal production through private sector coal production was stuck because of corruptions and scams during the coal allocation process.

Given the situation in 2014, there seems to be a dramatic change one year later. Here is an excerpt from The Wall Street Journal on how bureaucratic processes and challenges are slowly being overcome by the NDA to meet its ambitious billion-ton plan by 2019:

Acquiring land for mines and rail lines takes years of delicate negotiation. In Jharkhand state, a mine called Amrapali was inaugurated with fanfare last July after more than a decade of planning and wrangling. Mr. Goyal spoke by video conference at a ribbon-cutting for the open-pit mine, which can theoretically produce 12 million metric tons of coal a year. After a strong start, it stagnated. With only a rutted two-lane road to haul its output to the nearest rail head 50 miles away, management throttled back production temporarily so inventory wouldn’t accumulate. Coal that sits too long can burst into flame.

Mr Goyal, the coal minister, early on began reviewing supply networks so mines would feed only the power plants to which they have good road or rail routes. But he soon found that bigger thinking was required…

Mr. Modi named Anil Swarup, a fast-talking civil-service veteran with a knack for getting stuck bureaucratic gears moving, as the Coal Ministry’s top bureaucrat. “If you can set this sector right, the economy will be taken care of,” Mr. Swarup said Mr. Modi told him.

With the billion-ton target in mind, Mr. Swarup hit the road, visiting state capitals to prod officials to move faster on applications for coal and rail projects. He ordered up a vast database describing the problems at each of Coal India’s hundreds of mines and strategies to resolve them… ministry officials have kept close watch on mine managers’ progress. At Bejdih, the mine in West Bengal, manager Gujjula Pullaiah said he gets a call from his supervisors whenever production dips below the targeted 100 tons a day….

During efforts to get environmental approvals for a mine near a town called Belpahar, ministry officials repeatedly called and texted A.N. Sahay, the head of Coal India’s unit in the state of Odisha, urging him to follow up with federal and state authorities. Now, with the approval in hand, the mine can produce three million tons a year more than before.“That’s how production will increase,” Mr. Sahay said—“one million tons here, three million tons there.”

This obsessive approach to managing bureaucracy led to an increased production at Coal India and also the opening of 60 new mines. This hands-on style is also evident in encouraging foreign investment in the electricity sector. There was recent news that Softbank and other investors were looking to invest $20 bn in solar energy. However, as we all know, there is a big difference between intention and action in India. The bureaucracy has to be managed to take even a simple step. Here is an example of Piyush Goyal trying to get Masayoshi Son, founder of Softbank, to invest in a project in Chhattisgarh:

On a recent trip to the Indian state of Chhattisgarh, federal Power Minister Piyush Goyal sensed the region could woo investment from SoftBank Group Corp.’s billionaire founder Masayoshi Son, who happened to be elsewhere in the country. When Goyal asked for Son to fly to the state capital Raipur immediately, Son’s colleague — mindful of India’s thicket of aviation rules — thought the minister had lost his mind. “He said, are you crazy?” Goyal recounted in a Sept. 8 interview in New Delhi. “We’re in a U.S.-registered plane, just to get a permission takes 14 days.” Goyal said he made about 10 calls to clear Son’s flight in just 15 minutes, a rare intervention that few in India can expect

The focus on removing bottlenecks has begun to pay off in production. Here is Goyal talking about the increase in Coal India production:

Goyal said that the company last year achieved 32 MT production which was more than the accumulated 46 MT produced during the four years prior to the NDA government coming to power. “The CIL has now set itself a seemingly impossible target of 50 MT for the next year,” he further said.

This increase in coal production has led to a reduction in coal imports that has a larger impact on India’s balance of payments. Here are the relevant parts from The Economic Times:

“With unprecedented increase in coal production by Coal India, import of coal comes down for third successive month. Coal imports down from 17.3 MT in Sept 14 to 12.6 MT in Sept 15. In value terms from Rs 8,598 crore to Rs 6,027 crore, a reduction of 30 per cent,” Coal Secretary Anil Swarup tweeted.  “Imports by power utilities in April-September were down nearly 7 per cent to 41 million tonnes this year from 44 million tonnes in the same period last year as they preferred buying domestic coal instead, which is easily available now,” Viresh Oberoi CEO and MD mjunction, an e-auction joint venture between Tata Steel and SAIL, “This has significantly affected overall imports even as import of other types of coal either remained flat or increased a bit,” he said.

Putting together this larger trend in improving coal and electricity situation is difficult because of the relative lack of media coverage on this situation given the boring nature of the topic. Yet, ultimately, these are the kinds of action that will change India.

Which is the next sector to keep an eye out for boring but real improvements? The railways. Stay tuned for another year to see if this hard but necessary process improvements begin to bear fruit.