Press Information Bureau

Government of India

Ministry of Coal

16-January-2013 13:10 IST

In order to fast track development of coal blocks in the country, the Government has proposed to develop some of the CIL coal blocks through mine developer and operator (MDO). Modalities are being worked out in this regard. This was stated by Shri Sriprakash Jaiswal, Minister of Coal at the inaugural session of the 7th International Exhibition & Conference on Power Sector being jointly organised by the Ministry of Power and FICCI here today.

He said that efforts are being made to enhance exploration for enlarging resource base for coal. As against an actual growth of 3.8% achieved in the XI Plan, CIL has been asked to target a growth of 7% during the XII Plan to ensure more availability of coal through domestic resources. Regarding import of Coal and price pooling, the minister said that a proposal to import coal with pooling of prices is suggested to bind over the current shortage situation but this needs to be studied in depth for a considered view as a number of state governments have expressed their reservation on the proposal.

Full text of Coal Minister,s speech as follows:

“As you may be aware that coal is the main stay of India’s energy and will continue for quite some time into the future. About 55% of primary energy supply and about 70% of power generation in the country is coal based. This is basically on account of availability of coal reserves in abundance and lower price of the fuel compared to other fuel resources. At the current level of coal production of about 540 million tonnes, country’s coal reserves are likely to last for over 100 years. However, efforts are being made to enhance exploration for enlarging resource based.

The supplies of coal in the recent times are falling short of projected demand due to domestic production capacity constraints on various accounts and Government is taking all the necessary measures in addressing these issues and improving the situation.

The Eleventh Five Year Plan which concluded recently had initially envisaged a growth in coal production of some 9.5% against 5.6% achieved in the Tenth Plan. However it ended up at 4.61 % (CAGR). While the growth in the first three years has been 7.4%, it however suffered a setback in the later part of the Plan mainly due to environmental restrictions, land acquisition and R&R issues, evacuation constraints and law and order problems in some coalfields.

The XI Plan ended with an overall production of 540 million tonnes in 2011-12 against which the production envisaged in the XII Plan is 795 million tonnes implying a growth of 8%. Even with this ambitious growth, there lies a gap of about 185 million tonnes between domestic production and projected demand of 980 million tonnes in 2016-17.

The role of Coal India Limited in enhancing coal production in the country has been commendable. From about 78 million tonnes at the time of its formulation, it has reached a level of about 436 million tonnes in 2011-12 and is envisaged to reach 615 million tonnes in 2016-17. As against an actual growth of 3.8% achieved in the XI Plan, CIL aims a growth of 7% during the XII Plan which is a gigantic task.

To achieve the projected growth in production a number of new projects are planned to be taken up in PSU coal companies and a number of coal blocks have been allocated to various private and government companies and few more are in the pipeline for allocation. Besides, supplies would also need to be made good through imports.

For increased transparency in coal block allocation the provisions of MMDR Act have been amended and new set of Rules have been framed for allotting new blocks through competitive bidding. In order to fast track development of some of the coal blocks in CIL, it is proposed to develop these blocks through mine developer and operator (MDO). Modalities are being worked out in this regard.

Role of coal producing States is very critical in achieving planned production through facilitating the acquisition of land and settling R&R matters besides expediting the process of EC and FC at their end. Ensuring better law & order in some of the coal producing States like Jharkhand and Odisha is important.

Also the recommendations of Group of Ministers constituted to address the environmental and developmental issues relating to coal mining and other developmental projects are important and if implemented would provide huge scope to reduce procedural delays at both state and Central levels and objective assessment of environmental impact of coal mining.

Technology development is critical in enhancing production. With a view to ensure improvement in production, productivity and safety CIL has been asked to look into modernization and technology development in the XII Plan.

Coal evacuation facilities are important in ensuring movement of coal from production centers to consuming centers. Action has been initiated in case of a number of identified critical rails links in potential coalfields with the help of railways but the same needs fast tracking for realizing the projected production from these fields at the earliest. Cooperation of concerned State Governments in facilitating land acquisition and expediting EC & FC to these projects is equally important.

With a view to adopt international best practice of trading thermal coals and for ensuring consistency in quality of coal supplies Government has introduced GCV based grading and pricing of thermal coals in place of the earlier system of UHV. Emphasis is laid on strengthening the infrastructure for crushing, sizing and processing of coal besides strengthening sampling infrastructure in coalfields.

In order to fast track development of some of the coal blocks in CIL, it is proposed to develop these blocks through mine developer and operator (MDO). Modalities are being worked out in this regard.

Our efforts to acquire coal equity abroad have thus far resulted in acquiring two coal blocks in Mozambique by state owned CIL while private companies have been successful in acquiring the assets in countries like Indonesia, Australia, South Africa, and South America etc. We need to be aggressive in this regard from long term energy security point of view.

Price of coal in India is far below the international coal prices and the same needs to be rationalized for avoiding wastage and in efficient use of the same. A proposal to import coal with pooling of prices is suggested to bind over the current shortage situation. However, this needs to be studied in depth for a considered view as a number of state governments have expressed their reservation on the proposal.

Environmental footprint of coal mining needs to be reduced by adopting international best practices. Proper reclamation of mined out land and creating economic value to the same with a view to hand over the same back to the society is critical for sustaining the coal mining activities in times to come. Similarly, coal usage also needs to be made more environmental friendly through adopting clean coal technologies and improving efficiency levels.

With a view to infuse competition in the coal sector and to review the existing institutional mechanism, it has been proposed to take up the exercise of restructuring of Coal India Limited for which expression of interest has been floated by the Ministry for identifying suitable consultants.

I am hopeful that the deliberations of the Conference in the next three days would provide us with some concrete suggestions in overcoming the difficulties and improvements required to cope up with the envisaged energy demand.”

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NCJ/RV

Coal sector reforms: propose MDO development and competitive bidding to boost domestic production and supply reliability. Government proposes developing selected Coal India Limited blocks through mine developer and operator (MDO) arrangements alongside amended MMDR rules instituting competitive bidding; complementary measures include CIL modernization, GCV-based grading and pricing, accelerated rail evacuation and state facilitation of land, R&R and clearances, while imports and overseas equity are contemplated as supplementary supply options.