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Indian coal mining sector has gained traction with the recent passage of Coal Mines Special Bill 2015 in Parliament. Anil Swarup, Coal Secretary, Ministry of Coal, Government of India shares his views with Infrastructure Today on the coal block auctions, the impact of the approval of Coal Mines Bill on the country´s power sector, strategy for augmentation of coal production for Coal India Limited (CIL) and much more. Excerpts:
Can you please apprise us how the passage of Coal Mines Special Bill 2015 in Parliament will prove a game changer for the mining sector?
It will be a game changer in the sense of providing a platform for transparent auctions of coal blocks. These blocks were earlier allocated in such a manner that the Supreme Court and other agencies had concerns over its allocations, leading to its cancellation.
Now, the new act enables the government to auction these blocks through a transparent mechanism. Apart from this, the legislation also allows commercial exploitation of coal in the country. So far the coal blocks had been allocated only for specified end use, which meant that those allotting the coal blocks could not sell the coal in markets. But, the new legislation allows this for future coal mines if the government so desires.
Do you think it will change the mining landscape of the country? Coal India has monopoly in coal mining. So, is this Bill going to abolish the monopoly of Coal India?
Definitely, it will change. Coal block allocation as per the new Act will also provide further scope for improvement in technology for the excavation of coal. It will allow private miners, who have the capability to use advanced technology in mining operations, and will bring efficiency too. All this will augment coal production in the country and change the landscape.
It´s rather harsh to say Coal India has monopoly in the coal business across India. The government of India, through recent coal auction, has given equal chance or for that matter level playing field to the private miners. This will enhance coal production beyond one billion tonne which was alone Coal India´s target. The role of CIL will be enhanced in terms of coal production from the current level of 494 million tonne per annum to almost one BnT per annum in the next five years. Similarly, there will also be greater requirement of coal beyond one BnT. We are also encouraging private sectors to mine coal so that we will have 1.5 BnT of coal production by 2020.
Therefore, both Coal India as well as private players will be encouraged to increase the coal production in the country. That is the need of the hour.
As you said, Coal India is expected to increase its output to one billion tonne per annum by 2020. How are we likely to achieve this target?
A very detailed mine-wise plan has been prepared in terms of increasing coal production for each mine. In addition to this, we will identify issues like land acquisition, environment clearance, human resource management and technology requirement; and the resolution of all these issues will enable Coal India or those mines to produce more. A system has been placed for the resolution of these issues. If we go by what has been happening during the last year and the first month of the current year, the indications are that we should be able to reach the target of one BnT per annum by 2020.
Has Coal India geared up to achieve this output? With CIL improving its production, will it involve a third party in the excavation process?
Coal India is already ready to achieve this target. It will take some time to materialize as it requires technology up-gradation, human resource management, and prudent planning. But a lot of work has been done on this front to reach one billion tonne per year level.
Coal India has already involved a third party in the excavation process and more such participation will be required in future for pushing coal production.
What challenges do you face during coal mining operations?
The challenges will be evacuation of coal by railways, land acquisition, and forest clearances. There will be human resources related challenges and technological challenges. There are huge challenges in achieving the target, but we are trying to meet those challenges.
What kind of opportunities will the approval of Coal Mines Bill 2015 generate for the coal mining sector? How will it impact the power segment?
It will create immense opportunities. We have already auctioned a number of mines and allocated them. Beyond Coal India, there will be private entities that will start mining operations soon. Subsequently, it will enable them for commercial mining of coal. There are huge opportunities for non-Coal India companies.
If the country has sufficient availability of coal, the power sector is going to benefit from it. It is, again evident from past few months that power generation has improved to a record level. This has been possible only because coal supply has improved. As on date, there is no single power plant that is short of coal. So, with improvement in coal supply, power sector also will witness enhanced power supply.
Please give us an update on the current coal block auctions? How much did the government receive from these auctions? When will these allocated coal blocks start production?
We have so far auctioned 29 coal blocks and 38 have been allocated. The government has not received the entire amount. The entire amount will flow over to the states and not to the central government over the next 30 years. The estimated benefit accruing would be Rs 3,35,000 crore and the states will receive this amount in terms of auction fee, royalty, other fee etc.
The production from allotted coal blocks will vary from block to block and also depend on preparedness. The blocks that are in Schedule II will start production any day as all the requisite clearances are in place. Most of them should start production as quickly as possible. However, the blocks in Schedule III may take some time, may be 6 to 8 months or even a year, before they start coal production.
How much revenue would you expect in next round of coal blocks auction?
I cannot say. There is no estimate of revenue per se. We have put in place a transparent mechanism for auction. It will depend on demand and supply.
India is set to overtake China as the biggest importer of power-station coal by 2017. May I have your comments?
If our production level goes up, then there is no necessity to import thermal coal because the quality of coal that is required for thermal power plants is available in the country. One of the government´s objectives is to reduce imports. However, it will depend upon the amount of coal we are able to mine. If we are able to produce adequate amount of coal for thermal plants, there will be no import of coal for power plants. But there are certain qualities of coal, which are unavailable in the country and will be imported.