core sector communique

Proactive Measures Required to Meet Increasing Demand of Coal –Sriprakash Jaiswal

There is urgent need to facilitate production of coal through proactive measures to meet increasing demand of coal otherwise the gap in demand and supply from domestic sources may exceed 200 million tonnes in the XIIth Plan period. This was observed by Shri Sripraksh Jaisawal while addressing the Roundtable Conference on Coal being organized by the India Energy Forum here today.

Expressing concern over slow progress of captive coal mining projects, Shri Jaisawal has said that early solutions need to be found for various problems facing the coal sector so that the economy can go ahead with the planned growth rate and the coal sector is enabled to play its rightful role in fuelling this growth.

Full text of the minister’s speech is as follows;

“We are aware that coal is the main stay of India’s Energy and our dependence on the same is likely to continue for quite some time in the future. The Coal demand and production were envisaged to grow at 9.5% (CAGR) against an actual growth of 5.6% achieved in the X Plan. The Coal demand grew at 7.3% and Coal production at 5.4% in the first four years of the XI Plan. The assessed coal demand in the current year 2011-12 is 696 million tonnes and target of coal production is 554 million tonnes. The gap in demand and domestic supply has increased from about 50 million tonnes in 2007-08 to 83 million tonnes in 2010-11. Gap in the current year is envisaged to be 142 million tonnes. After taking into account of 28 million tonnes of coal stock liquidation from CIL for supply to power sector, the gap is envisaged to reduce to 114 million tonnes. However stock liquidation is subject to availability of rakes and if the same is not feasible, the power sector needs to arrange evacuation of coal from pit heads of their own. Measures proposed to step up production are subject to different statutory approvals and availability of land.

Keeping in view the indigenous availability and demand estimated by CEA for power utilities in future, Ministry of Power should plan for higher imports. Coal is in OGL and import of Coal by CIL may not be proper as core competence of CIL essentially is coal production. Separately Power Ministry must also examine the need for existing plants to be retro-fitted in order to absorb higher percentages of imported coal.

Demand side management is critical to take care of proper distribution of domestic production. Power sector needs to improve specific coal consumption levels through undertaking efficiency improvement programmes since 1% improvement in specific coal consumption implies a saving of about 6 million tonnes of coal. Similarly, reduction in T&D losses will imply savings in additional generation requirements by that extent.

Coal India Ltd. has its own limitations in augmenting production and satisfying the consumers as per the projected demand. The policy of captive mining has also not helped the sector to the desired extent. Only 28 blocks have entered into coal production out of the 194 blocks allotted to various public and private companies.

Both public and private companies are suffering due to delays in obtaining environmental and forestry clearances in addition to the constraints in land acquisition and R&R.

However it is a fact that coal mining has left adverse impact on the environment over the period and the credibility of the sector needs to be improved in this regard by adopting best practices. There exist some exceptions like in NCL, SCCL and NLC where the sector deserves credit for reclamation and rehabilitation of mined out areas in a systematic manner.

Cooperation of coal bearing states in organising Public hearings for coal projects in a time bound manner is critical to avoid delays in obtaining EC. Cooperation of coal producing states in addressing delays in processing forest land diversion proposals for Stage-I and Stage-II approvals, conducting Gram Sabha meetings for obtaining ‘NOC’ under FRA and land acquisition, R&R issues and law and order problems is equally important.

Cooperation of the Ministry of Railways in early implementation of identified rail infrastructure projects in potential coalfields for coal evacuation including additional rolling stock is a critical area in enhancing domestic production. In a number of cases coal companies are willing to fund the cost of the projects as there is no dearth of resources. Further, government is extending support in construction of road infrastructure in coal fields for improving connectivity and coal evacuation. However all these infrastructure development is dependent on timely acquisition of land.

Strengthening the port infrastructure in line with the envisaged large scale imports is another area which needs to be addressed in connection with handling of imports.

Energy security warrants acquisition of coal assets abroad. Efforts made in this direction have yielded some results by CIL and some private companies. We need to be more aggressive in our approach. Recent proposal of the government in creating sovereign wealth fund in this regard is a step forward.

We are on the threshold of Twelfth Five year Plan where the rise in production is expected to come from the spillover projects of the XIth Plan and the new ones to be taken up in the XIIth Plan. Unless we facilitate the new production through proactive measures, the gap in demand and supply from domestic sources would exceed 200 million tonnes in the XIIth Plan period, with the Power sector being the most adversely affected. Early solutions need to be found for various problems facing the coal sector so that the economy can go ahead with the planned growth rate and the coal sector is enabled to play its rightful role in fuelling this growth.

Inclusive growth and equity are the basic principles of development and our efforts should culminate in this direction in building the nation. I wish the round table conference all success and hope that the today’s deliberations would result in practical solutions to the issues coming in the way of enhancing domestic production.”