Public-private consortium as economic-organizing mechanism of coal enterprises liquidation

Olexander S. Serdyuk

Abstract


In the current economic conditions the issues of further effective restructuring of the national coal industry is becoming more important. Difficult mining and geological conditions, moral and physical obsolescence of technical equipment, lack of funding for restoration and increase of production lead to a deepening crisis of the industry resulting in an annual increase in unprofitable coal enterprises. This begs the question of finding effective implementation and further restructuring measures aimed at minimizing the costs of coal mining. The purpose of the article is the substantiation of organizational-economic mechanism that would realize the project of liquidation of coal mines most effectively. In modern terms of the budget deficit the question of finding effective mechanisms for rapid and effective elimination of coal mining companies that have no possibility of achieving break-even level of functioning is of paramount importance. As in the initial stage of the restructuring, the main obstacle on this path is the limited capacity of the state to finance disposal measures. The solution to this problem may be to attract private resources to perform work on the elimination of coal mines. Given the state's inability to fund the work of private organizations in full, the question arises about finding non-financial assets and enabling factors that induce them to perform liquidation activities. Given the high cost of work to eliminate coal mines we must assume that internal company resources will be insufficient to reimbursethe cost of private organizations, not to mention its financial benefits of the project. At the preparatory stage of the project participants should be consolidated into a single organizational structure with distribution of powers and responsibilities of the parties. The complexity and heterogeneity of the disposal measures determine the creation of a public-private consortium, where: a private party is represented by several participants that specialize in performing certain range of work; state party is represented by a company that will take over the part of the disposal measures executed with the least interested private organizations; consortium leader is the state authorized representative that coordinate joint activities of participants and monitors the quality of the work. Thus, based on public-private partnership positive results could be achieved. Distribution of responsibilities and powers between the parties is crucial in the formation of the consortium. The main complexity ofthis process is that the measures to eliminate coal mining companies are interdependent, so difficulties arise at the stage ofdetermination of work scope and cost in resource-material terms. To solve this problem at the preliminary stage of forming a consortium the list of necessary measures should be clearly defined. Given the experience of the closure of coal mining enterprises in Ukraine it should be noted that a number of necessary steps were not predicted in the elimination program. In particular the following important stages as: drilling degasification wells - aimed at preventing the concentration of methane on the surface; laying out space - implemented to prevent deformation of the earth's surface and therefore destruction of buildings, located within the mine field; mining waste dumps - aimed at cleaning the surface areas and reducing harmful emissions; providing interest-free loan to redundant miners - in order to encourage the former coal miners to business activity. In consequence, within companies where planned liquidation activities were one hundred per cent implemented the environmental and social problems emerged. Thus, based on the established list of necessary measures the procedure for their distribution between the parties of the consortium members should define. Specialization or experience in relevant work should be considered as the main criterion for selection of private companies to be included in the consortium. Given that the assets of the coal mining companies have a different number and price, it should be noted that their total value may not be enough to ensure the profit to private organization. Thus, in order to increase the investment attractiveness of the project, a public-private consortium should be enabled to increase the share of state capital. A key feature of the consortium is that the private party services are paid by domestic capital mine. Thus, we can conclude that to close coal mining companies the project is expedient to create a public-private consortium between the parties where participants will distribute obligation to perform complex liquidation works.

Keywords


restructuring; liquidation of mines; public-private partnership consortium; the capital of coal mines; the cost of disposal operations

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References


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DOI: https://doi.org/10.15407/econindustry2015.02.088

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