Ministry of Coal - Year End Review

India is currently producing about 729 million tonnes of coal. However, it is a fact that domestic production is not able to meet the demand of coal in the country. India has imported 247 million tonnes of coal last year and had spent 1.58 lakh crore as foreign exchange. India being world’s second largest coal producer and being the 5th largest country in terms of coal deposits, with coal reserves which may last at least 100 years more, the intention of the Government of India is to bridge the mismatch between the demand and supply of coal in the country. This will not only provide a huge opportunity for employment in the backward regions but will also save precious foreign exchange to the extent of almost Rs. 20,000 crores to Rs.30,000 crores per year.

    1. Coal Sector Reforms introduced ease of doing business

        a. Relevant provisions of the CMSP Act and the MMDR Act were amended through the Mineral Laws (Amendment) Act, 2020 with a view of ensuring ease of doing business, removing redundancy in provisions and bringing flexibility in allocation.

        b. In additions to change in law, the auction process and methodology was further simplified in 2020. 

        c. With the above changes in law and policy, the auction of coal blocks for commercial mining was launched in June 2020 with 38 blocks in the first tranche. 

        d. Total annual revenue generation from the auction is estimated at ~Rs.6656 crore considering production at aggregated Peak Rate Capacity level of ~51 MTPA.

    2. Import Substitution

        a. Import substitution is one of the topmost priorities of the Govt. of India presently, an Inter-Ministerial Committee (IMC) has been constituted for the purpose.

        b. The impetus for import substitution has been triggered off primarily due to the following:

            i. Coal import in 2018-19 was 235 MT, further risen to 247 MT in 2019-20.

            ii. Huge outflow of precious foreign exchange (1.71 lakh crores in 2018-19).

            iii. Abundant coal availability with all time high Stock of 75 MT in different Coal Subsidiaries of CIL as well as to the power.

            iv. Ambitious production plan of all coal companies.

        c. For promoting import substitution, thrust is being made to offer large quantities of domestic coal through various format of e-auctions so that the consumers are not inclined towards import of coal.

        d. Besides the above, CIL is also giving discounts through waiver of Performance Incentive, coastal TPPs included, to encourage import substitution.

    3. Expansion of Coal sector

        a. To eliminate substitutable quantities of the import of coal in country, it is imperative to increase domestic coal supplies to the consumers, rationalize coal movements, review certain levies, incentivize domestic coal consumption to distant consumers who are attracted to coal imports for economic reasons.

        b. It is projected that the coal demand will grow from 955.26 MT in 2019-20 to 1.27 BT in 2023-24.

        c. To meet this growing demand a coal production plan has been prepared and CIL has been given a target of producing 1 Billion Tonne coal by 2023-24.

        d. The investment of Rs 44,000 crore by the Coal Companies for coal evacuation infrastructure is likely to go into the development of coal handling plants, ports and strengthening of the transportation chain as we want to minimize the road transportation and use upgraded conveyor belts for transportation.

    4. First Mile Connectivity

        a. The ‘Transformative Idea’ of First Mile Connectivity project aims to ease the life of people residing in coal mine areas by reducing traffic congestion, road accidents, adverse effects on environment and health around coal mines and by enhancing coal handling efficiency through employing alternate transport methods like mechanized conveyor system and computerized loading into railway rakes.

        b. Coal companies have formulated a strategy to develop an integrated approach for eliminating road transportation of coal in the mines.

        c. CIL had mechanized conveyor system and computerized loading in 19 projects having 151 MTY capacity.

    5. Diversification Plan

        a. The Ministry of Coal has two large PSUs – Coal India Ltd. (CIL) and NLC India Ltd. (NLCIL) under its administrative control.

        b. CIL is a hard-core coal company with 7 subsidiaries – while NLCIL has ventured into new sectors (power generation, renewables, coal mining).

        c. CIL contributes about 80% of India’s domestic coal production and 65% of coal consumption.

        d. CIL operates in 7 states and NLCIL in 5 states.

        e. Diversification was felt a necessity, especially in the light of climate change debates, diversifying into non-coal, secure new businesses, productively utilize sizeable reserves/funds in their Balance Sheet, fiduciary responsibility towards long-term future of coal-mine workers, leveraging economic growth, particularly in eastern region, need to invest in coal mines and related infrastructure to eliminate substitutable coal imports, support 100 MT coal gasification and likely coal exports.

        f. Three broad baskets of diversification are

            i. New Business Areas (Diversification) to transform CIL/NLCIL from coal companies to energy companies

            ii. Clean Coal Technologies (Technology-related) to provide sustainability to coal business

            iii. Coal Mining Projects (Core business) to help achieve 1 Billion Tonne coal production by 2024 and create essential related infrastructure

    6. Green Initiatives

        a. Coal Bed Methane

            i. It means a natural gas trapped in a coal seam. Coal bed Methane (CBM), an unconventional source of natural gas is now considered as an alternative source for augmenting India’s energy resource.

            ii. India has the fifth largest proven coal reserves in the world and thus holds significant prospects for exploration and exploitation of CBM.

        b. Surface coal gasification

            i. India has a reserve of 289 Billion tonnes of non-coking coal and about 80% of coal produced is used in thermal power plants.

            ii. Coal gasification is considered as cleaner option as compared to burning of coal and utilises the chemical properties of coal.

            iii. Syn Gas produced from Coal gasification can be utilised in producing Synthetic Natural Gas (SNG), energy fuel (methanol & ethanol), production of urea for fertilisers and production of Chemicals such as Acetic Acid, Methyl Acetate, Acetic Anhydride, DME, Ethylene and Propylene, Oxo chemicals and Poly Olefins.

            iv. Three phase strategy has been chalked out to set up coal gasification projects:

                • Phase I: Setting up projects on pilot basis such as Talcher Fertiliser plant: Coal Gasification based on high ash coal mixed with pet coke and Dankuni Methanol Plant: Coal Gasification based on low ash coal.

                • Phase II: Up scaling the efforts towards coal gasification. 5 projects have been identified in Phase II for scaling up gasification from low ash coal.

                • Phase III: After successfully establishing the technology with high ash coal in Jharkhand in phase II, more CIL projects will be identified for coal gasification.

        c. Setting up of Coking Coal Washeries: The Government plans to increase the supply of washed coking coal to the Steel sector from 3 to 15 MT.

        d. Sustainable Development Cell: Recognizing the importance of bringing sustainability in coal mining, a “Sustainable Development Cell” has been created in Ministry of Coal and also in all coal PSUs to promote adoption of better environmental management practices in coal mines.

        e. Improving public perception of coal mining via Coal Mine Tourism

            i. 2 mega eco-projects inaugurated, and foundation stone laid for 3 eco-parks on 23rd July 2020.

            ii. 4 Eco Parks likely to be completed in 2021-22 and 2 each in 2022-23 and 2023-24.

            iii. Bio-reclamation /Bio recovery of Mined-out areas (Ha)

            iv. Cumulative achievement of 3520 Ha & plantation of 81 lakh saplings in FY 21 (up to Oct 2020) against the target of 3400 Ha & 80 lakh plants till FY21.

        f. Supply of mine water for domestic use and utilize mine water for potable and irrigation purposes.

(The author is a trainer for Civil Services aspirants. The views expressed here are personal.)