Coal is the mainstay of India’s energy and 55% of primary energy supply and 70% of power generation in the country are coal based. India ranks third in coal production globally after China and USA.
The Ministry of Coal is responsible for exploration, production and distribution of coal and lignite to meet the requirements of different consumers and through the public sector undertakings it is discharging its responsibilities. Coal India Ltd. and Neyveli Lignite Corporation Ltd. (NLC) are the two Central PSUs under the administrative control of the Ministry. Singareni Collieries Company Ltd. (SCCL) is the joint undertaking of Government of Andhra Pradesh and Government of India with equity sharing in the ratio of 51:49 respectively.
The need for systematic and scientific development of coal industry was recognized from the inception of the process of national economic planning in the country. National Coal Development Corporation (NCDC) was set up in 1956 which was the first step towards planned development of the industry. Singareni Collieries co. Ltd. (SCCL) was already a government company in 1956 and Central Government started equity participation in SCCL from 1960 onwards. However, comprehensive development programme could be initiated only after nationalisation of the industry in the early 1970s and formation of Coal India Ltd. (CIL).
Soon after nationalisation of coal sector in the early 1970s, Coal India Ltd. (CIL) was formed as a holding company in 1975 with four coal producing companies and one planning and design institute and the level of production was about 73 million tonnes at the time of its formation. Today CIL has seven coal producing companies and one planning and design institute with their operations spread over eight states and has achieved a level of 436 million tonnes in 2011-12.
India’s assessed coal resources currently stand at about 293 billion tonnes of which about 118 billion tonnes or 40% are proved reserves and the remaining 60% are in inferred and indicated categories. Plans have been drawn to enhance the efforts for coal exploration with a view to enhance the reserve base.
Coal production enhancement is basically through taking up of new projects under the public sector companies of the Ministry and development of blocks allotted to various companies in public and private sectors. In addition, acquisition of coal properties abroad has also been adopted for securing coal supplies in meeting the demand.
A number of policy initiatives taken by the Government over last three decades has strengthened the coal sector in enhancing production with due regard to safety and environment.
Introduction of setting of economic reforms in the early 1990s led to tapering off the budgetary support. After a major capital restructuring of CIL in 1996, the budgetary support to CIL was completely stopped. Coal prices were partially decontrolled in 1996 and administrative pricing mechanism was discontinued on complete decontrol of coal prices with effect from 1, January, 2000 and coal companies were empowered to notify the prices.
Subsequently the boards of the performing coal companies were delegated higher financial powers for decision making on their own. A new coal distribution policy was introduced in 2007 and fuel supply agreements have been made mandatory. Coal royalty has been fixed on advalorem basis in place of mixed approach of fixed and advalorem rates. The Government has also encouraged acquisition of coal equity abroad from energy security point of view. Import duty on coal imports has been tapered off and currently there is no import duty on imports. Similarly, import duty on project imports has also been removed from the current fiscal. A proposal for setting up independent regulatory authority for Coal is under consideration of Government. A Bill to permit private sector in the commercial mining of coal has been awaiting consideration of the Parliament.
Coal production has risen from about 78 million tonnes in 1975 to 540 million tonnes in 2011-12, the Terminal year of the XI Plan. About 100 million tonnes of coal was imported in 2011-12 which forms about 15% of the coal consumption of about 650 million tonnes during 2011-12.
The coal production target in the Terminal Year 2016-17 of the XII Plan is set at 795 MT implying a growth of 8% against the actual growth of about 4.6% in the XI Plan. However, when compared with the projected demand of 980.50 MT in 2016-17, a gap of 185.5 MT exists between domestic production and the projected demand. This would need to be met through coal imports.
There have been constraints in enhancing coal production in terms of environmental issues, land acquisition, R&R, coal evacuation and law & order in some places. However, Ministry of Coal has been taking up the issues with the concerned State and Central authorities on regular basis for amicable solutions. Over the period of time the rehabilitation package of CIL has evolved and made more liberal than the National R&R Policy. Coal companies can adopt either CIL’s policy or the concerned State Govt. Policy whichever is liberal.
Coal evacuation is one of the critical area in the entire coal supply chain in the country and railways are the major bulk transporter. While efforts to strengthen the existing infrastructure are being made on continuous basis, the most important rail connectivity projects in the potential coalfield areas have been taken up by the Ministry with the Ministry of Railways and the State Governments concerned. These projects will be funded through the internal resources of CIL. Action plan has been drawn in regard to implementation of these projects and railways, Ministry of Coal and coal companies are regularly monitoring the status of implementation.
The pending issues regarding environment and forestry clearances are being regularly addressed in consultation with Ministry of Environment and Forests and the State Governments concerned. All the mitigation measures as approved by Ministry of Environment and Forests while according environmental clearance are being strictly followed by the coal companies while implementing the projects and rigorous monitoring by both coal companies and the State Pollution Control Boards is being done.
Mine reclamation and rehabilitation through properly drawn mine closure plans are being addressed both during the mining and at the stage of final closure. The Ministry has issued comprehensive guidelines in regard to preparation of mine closure plans which are now integral part of mining plans. Mine owners are bound through financial commitment by charging specified rate per hectare of land involved and through opening an escrow account with coal controller.
The Government has approved a Master Plan to address the issues of fires, land subsidence and rehabilitation of affected persons in the old mined out areas of Jharia and Raniganj coalfields for implementation in ten year’s time. Jharia Rehabilitation and development Authority in the State of Jharkhand and Asansol Durgapur Development Authority in the state of West Bengal have been entrusted with the job of implementation of Rehabilitation works particularly for private people and BCCL and ECL will be responsible for rehabilitating their colonies and employees. The Government will provide financial resources for implementing the project.
After amendment of the Coal Mines (Nationalisation) Act in 1993, the allocation of coal blocks for captive purposes was started. The coal blocks for private sector were allocated through a mechanism of Inter-Ministerial and Inter-Governmental Screening Committee. The coal blocks were also allocated to Government Companies. So far 218 coal blocks were allocated out of which 177 coal blocks stand allocated as on date.
The MM(DR) Act, 1957 was amended in 2010 providing for competitive bidding as selection process for allocation of blocks to Private Sector. The details Rules for the above purpose have also been notified. Consequently, the Government has offered 17 coal blocks for allocation to Government Companies. The modalities for allocation of blocks to Private Companies through bidding are under finalisation.
Emphasis is laid on technology development and modernisation in the mines of CIL for improved production, productivity and safety.
As far as lignite is concerned, the currently assessed reserves stand at about 42 billion tonnes of which about 6 billion tonnes or about 15% are in the proved category. More than 80% of the lignite resources occur in the State of Tamil Nadu and about 12% in Rajasthan and 6% in Gujarat. The balance are spread over Puducherry, J&K and Kerala.
The lignite production in the country has increased from about 8 million tonnes in 1984-85, the Terminal Year of the VI Plan to 43.10 million tonnes in 2011-12, the Terminal Year of the XI Plan. Lignite production is projected to reach about 68 million tonnes in 2016-17, the Terminal Year of the XII Plan. The important producers of lignite in the country are Neyveli Lignite Corporation, Gujarat Mineral Development Corporation and Rajasthan State Mines & Minerals Development Corporation.
Neyveli’s lignite production in 2011-12 was 24.59 million tonnes and the same is projected to be 30.51 million tonnes in 2016-17, the Terminal Year of the XII Plan. The production from NLC is directly linked to downstream power units and one of the IPPs. The currently installed power generation capacity of Neyveli is 2490 MW and has generated 18,789 Million Units (gross generation).
The Government has introduced Gross Calorific Value (GCV) based grading and pricing of thermal coals on par with best international practices of coal trading in the world with effect from 1.1.2012. Emphasis is laid on coal quality improvement through proper crushing, sizing and preparation and strengthening sampling arrangements. Coal beneficiation is being addressed on priority. Both environmental and economic considerations are the drivers for promoting coal beneficiation in the country.
At the same time development of clean coal technologies covering coal bed methane, underground gasification, coal to liquids or coal liquefaction have been under focus for quite some time. Government has already offered 33 coal blocks for exploration and exploitation of CBM in four rounds of bidding and four blocks have entered in to commercial production with some 2.5 lakh cubic meters per day of gas production.
CIL has conceived five Coal Mine Methane projects and after consultation, Ministry of Petroleum & Natural Gas have agreed to facilitate CIL through nomination for commercial exploitation of CBM and a policy framework in this regard is under process. Government has allocated two coal blocks for CTL purposes to two private companies. The Ministry has also identified 5 lignite blocks and two coal blocks for development of UCG and the same will be offered in due course of time.
Since coal has to continue to play a critical role in supporting India’s energy plans for considerable time into the future, we need to make coal mining and coal usage more environment friendly. We also need to strengthen our infrastructure for coal movement from production centres to consuming centres and strengthen the port infrastructure for handling rising imports. The policy of inclusive growth for carrying the affected communities in development of coal is most important in years to come.