Nantoo Banerjee
Allotment of captive coal mines to the public and private sector producers of power, coal and cement is good news, but the coal and lignite industry will remain overwhelmingly under the control of India’s established public sector producers benchmarking the mining practices, technology use, output, quality and prices. The captive coal mines being auctioned to industry will add value to their owners if they can match or improve upon the ratios fixed by the public sector manufacturers. Suffice it to say that the growth requirement of India’s eight core sector industries in the next 10 years put the highest pressure on coal production. Coal directly feeds at least four core activities – electricity generation and production of steel, cement and fertiliser. The government’s select captive privatization of the coal sector may ease the supply of coal to some extent, but industry will still very largely depend on public sector miners of coal and lignite.
India will still require to import metallurgical, steam and power grade coal for years. This is despite the fact that the country has almost a third of the world’s proven reserves of coal estimated at around 900 billion tonnes. India’s coal reserves up to the depth of 1200 meters were estimated at 301.56 billion tonnes by the Geological Survey of India as on April 1, 2014. The subsidiaries of Coal India alone are raising close to 470 million tonnes a year against the national output of around 570 million tones. The two other major producers are: joint sector Singareni Collieries (SCCL) and public sector Neyveli Lignite Corporation (NLC). The country’s total lignite reserves are estimated at 43.22 billion tones. NLC mines less than 27 million tonnes of lignite a year while SCCL’s production hovers around 54 million tonnes.
Domestic coal and lignite production are far short of the requirement and India is increasingly being dependant on coal import. The situation is going to continue despite limited privatization of the industry. A vastly improved performance of public sector coal companies alone can limit India’s coal imports. Integrated steel plants like SAIL and Tata Steel will continue to be a major importer of coking coal, the local reserves of which are limited. Indications are the country’s coal import volumes may rise by 20-30 per cent over the next two years. Import in 2015-16 may go up to 210 million tonnes as domestic supply will fall well short of surging demand. Interestingly, the global situation is just the reverse. Severe oversupply of coal and fewer takers are dragging down import prices of both thermal and coking coal. Coal India, SCCL and NLC must continue to step up production.
The gap between demand and availability of coal in India is expected to rise every year. As per the 12th Plan, the estimated demand of coal will rise to 980 MT by 2016-17 and 1373 MT by 2021-22 while the supply of domestic coal is expected to be 795 MT by 2016-17 and 1102 MT by 2021-22. Nearly 60 per cent of the country’s total installed power capacity of 2,09,276 MW is generated using coal. India ranks fourth in coal reserves. It is the third largest coal-producing country in the world. Private coal producers are given a limited option to sell part of their output outside. For instance, private power companies can sell up to 20 per cent of their uncontracted capacity in the open market, while the balance has to be sold through power purchase agreements with distribution companies. Presently over 10,000-mw of coal-based power generation capacity do not have PPAs, making them ineligible for supply from Coal India or mining from coal blocks.
It is in this context, Coal India’s latest resolve setting up a roadmap to double its production in the next five years to over one billion tonnes is most encouraging. However, it must be appreciated that the public sector behemoth is not within its full ability to deliver the desired production target. It will require quicker land acquisition and environmental clearances. This appears to be the most vital of all its external requirements. Internally, CIL is ready to employ better technology to fast-track its projects. It will require massive support of Indian Railways to evacuate production from new mines. It is good that the ministers in the Government, representing coal, power and the railways, are on the same page as the new CIL chairman, Mr. S. Bhattacharya, to achieve the target that will substantially meet the additional coal requirement of the domestic consumers in keeping with the country’s GDP growth projections. The private sector miners too will need cooperation from the government, local bodies and the railways to meet their modest targets. India’s future coal scene will see a lot of public-private cooperation in due course.
Coal India accounts for about 80 per cent of the country’s total coal output. But, its growth is humbled by a number of external factors. It has badly missed its output target of 482 million tonnes in 2013-14. It was able to produce only 462 million tones, pushing up India’s dependence on costly imports. The policy paralysis under the previous Government was partly responsible for the fall in its production. Fortunately, the Union Power Minister, Piyush Goyal, and the Railway Minister, Suresh Prabhu, are in sync to make sure of the timely completion of three critical railway lines, land acquisition and green clearances to help CIL achieve the coal target for the next fiscal and beyond. On its part, CIL has decided to acquire some 2,000 new railway wagons from its own kitty. The company has already earmarked funds for the purpose.
Coal must be produced and moved if the country has to progress. The availability of power at affordable cost is essential to the nation’s growth and development. Impediments to domestic coal production by both the public and private sector need to be removed fast by the central and State Governments and their agencies. Coal is available mostly in seven of India’s 29 states. These states – Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Andhra and Maharashtra – need to work closely with the Centre and coal mining companies to see India’s growth and their vital annual royalty income don’t suffer for want of meaningful cooperation among all concerned. (IPA)
Follow our WhatsApp channel