India is not short of coal

The government has decided to auction over 74 coal blocks of the 214 mines which were cancelled by the Supreme Court on September 25 and expects the re-allocation of the first lot to be completed by mid March next. Coal Secretary Anil Swarup shares his thoughts on the various issues surrounding the coal sector in the country and the roadmap ahead. Excerpts:

What is the immediate task in hand that you have considering the developments in the coal sector in the country?
My initial focus is totally on the follow-up on the Supreme Court decision. The SC had cancelled the 204 blocks and we are now attempting through a legislation to see that at least in those 42 blocks where the SC had given time till 31st March, we have somebody in position to take over those mines. And this entails a lot of groundwork in terms of identifying the value of the existing properties so that the existing leaseholders can be compensated as far as that is concerned and the mechanism through which it will be handed over to the owner. Then the whole process of the selection of the new allottee, all this is engaging our attention at the moment. It is pretty tough and challenging but that´s what makes it very interesting.

As of the first week of November, 61 of India´s 103 power plants had coal supplies which would last less than four days. What are the immediate measures that the government plans to undertake to tide over this dire situation?
There is a report that comes on a daily basis with regard to wherever the scarcity is and then accordingly we tie up with the railways and ensure that the coal supplies are continued. In the operations of such scale and size it does happen and it´s been happening on a regular basis. But then they have been able to tide over it also because there are a variety of constraints that come in the supply of coal. It does not merely occur in terms of mining, but in terms of transportation. So if there is a railway line problem or if a rake has got stuck somewhere, it impacts the supply of coal. This happens on a virtually daily basis and there is a meeting that happens on a weekly basis of the joint secretaries. There is an inter-ministerial body that looks into these aspects and resolves issues and there are crises at times like the one that happened in Maharashtra. So we went over to have a discussion with the Maharashtra CM and other senior officers to tide over the situation. So there are institutional mechanisms to handle (which) will continue to be handled. Supply per se is not an issue at this point of time. More importantly the issue is that of delivery, transportation and of evacuation. India is not short of coal or mining also. The problem is having sufficient infrastructure to ensure the delivery of this excava¡ted coal to the delivery point. That´s the real challenge.

What according to you is the way ahead to deal with this situation?
A number of aspects are being looked into. Right now we work through 200 rakes of railways and we are planning to add another 250 rakes in the next couple of years. So that´s a huge increase in the logistics support for evacuation of coal. There are other similar steps being taken to improve the turnaround time. So these are steps being taken to see that evacuation happens. Similarly more railway lines are being built for evacuation of coal from interior areas. In fact we are working on a clear-cut strategy paper to take the present level of production from 500 metric tonnes to a billion metric tonnes.

The Power Minister Piyush Goel has said that Coal India´s production will double in the next five years; and production would touch a billion tonnes by 2019. What are the reasons for this optimism and how would Coal India manage to meet this target? As I said we are working on a strategy paper first in terms of identification of such mines that can be excavated in the next five years. But more importantly the focus is on the evacuation. The primary problem in this country with regard to coal is evacuation because our infrastructure cannot support even the present mining. So you have to strengthen that infrastructure whether it´s railway lines, additional railway lines, the rakes, turnaround time at a particular location. So these are the steps that are being taken to see that the evacuation happens. To my mind mining itself may not be that big a challenge as compared to evacuation.

Why is the country continuing to rely on coal as its biggest power-generating fuel?
We rely on coal because we have it. And as far as the environmental issues are there, there are methodologies through which you can take care of these environmental concerns, like we have taken a clear decision that coal washeries have to be set up everywhere so that the environment is protected. So these coal washeries are being set up and almost 100 per cent coal will be washed over a period of time before it is sent. So there are plenty of steps that can be taken to protect the environment. But you can only select from the options you have in the country. And if we are sitting on the reserves of coal as we are, then we would use as much of the coal as we can.

How does the government plan to engage the private sector in coal production?
The private sector is already participating in terms of being allocated mines for specified end use. So that is already there and the private sector is participating. They are mining and are using the coal for that purpose. The present legislation also enables auction of mines for the purpose of commercial mining. That is non-end use commercial mining. This is just an enabling provision. We are trying to understand various nuances of it before we go ahead with that. Our initial effort is to see that the end use plants, they get reasonable amount of coal to run them; then we´ll see how commercial mining will come.

Will the government look at divesting a substantial stake in Coal India in the future or has this issue become a political hot potato?
I don´t think that the plan is to divest a substantial chunk. There is a disinvestment plan and they will be going as per that. That roadmap has already been drawn out, so nothing beyond it.

What relevance does the government´s ´Make in India´ initiative have for the coal sector?
As far as Coal India is concerned, in any case, all the coal is made in India. To enable ´Make in India´, if we are able to provide sufficient quantities of coal, both for say steel industry, which is a specialised variety of coal as well as the coal for generation of power, then it will enable industry to manufacture in India. If we are a power shortage country, then obviously manufacturing cannot happen as it is dependent on power. So to that extent, increase in supply of coal and increase in power availability will enable æMake in India´.

How soon can we expect the norms for e-auctions for the cancelled coal blocks to be tabled?
That entire schedule has been worked out and we are reasonably confident that before 31st of March 2015 we will have alternatives in place to take over. Whatever schedule has been drawn out, we are following that schedule, whether it is finalising the rules for it, whether it is terms of identifying the mines for it, categorising them or evaluating these mines, all these processes are underway.

India´s coal output productivity is among the lowest in the world. What are the reasons for the same and how can this be improved?
Coal productivity is not that bad, but probably does not match with that of Australia or South Africa. Coal productivity is fairly okay. It is determined by a number of factors and the strategy paper that we are working out for increasing the production to one billion, we are trying to address the issues, most of which are technological. So if we get the right technology coming in, productivity itself will be taken care of. This strategic paper should be ready in the next one month.

– Garima Pant & Devarajan Mahadevan