Thursday, December 31, 2015

Coal sector awaits quality norms, better output in 2016

After auctions to the tune of over Rs 3 lakh crore, coal sector is looking for key reforms in the new year in areas like quality checks as also the steps for augmenting output and rationalising the prices.

"2016 will be important in terms of rolling out of three things -- one is with regard to crushing of coal, the second is the preparatory work regarding washing and putting in a new regime for quality (checks)," Coal Secretary Anil Swarup told PTI in an interview.

January onwards, it has been proposed to supply crushed coal to consumers of the fossil fuel including power plants. Besides the government is also planning to put in a new regime for determining the quality of coal being supplied to the consumers, including power producers.

"From January 1, we should be able to supply 100 per cent crushed coal to all set of plants which are not based at the pit-heads. So crushed coal will travel now below 100 mm," Swarup said.

Crushing reduces the overall top-size of the run-of-mine coal so that it can be more easily handled and processed within the captive power plants.

"There will be a third-party assessment. It will start getting rolling in January or February next year."

The government is also committed to provide washed coal from October, 2017 in view of environment-related concerns.

Coal washing is a process of separation on the basis of difference in specific gravity of coal and associated impurities like shale, sand and stones to get relatively pure marketable coal without changing its physical properties.

Asserting that it would be the government's endeavour to see that the coal prices are rationalised, the secretary said that there are some issues with regard to the pricing of fossil fuel.

State-run Coal India Ltd (CIL) is presently discussing the matter, he said, while adding that "hopefully a decision would be taken with regard to price rationalisation also."

Stating that price rationalisation is the domain of Coal India, the government has said the coal PSU is considering the matter since a lot of issues have been raised in this regard.

The government had earlier said there was a need to rationalise the prices of certain grades of coal as per gross calorific value but there was no need to align them to international rates.

"The other important aspects that could happen in 2016 would be in the context of UDAY scheme for revitalisation of discoms where coal will continue to play a very important role both in terms of rationalisation of linkages both distance linkage as well as efficiency linkage. These will play an important role," Swarup said.

Highlighting the achievements of his ministry during 2015, Swarup said the year began with clearing up of the coal block allocation mess and following up on the order of the Supreme Court in this regard.

To begin with it was a tough job, as a lot of mines were cancelled, but the ministry did "pretty well" on the task of preparing a roadmap and rolling out the auction.

"It was task number one which was apparently well done," he said.

In order to put in place a robust and transparent system after the apex court order, an ordinance was promulgated to enable the government to re-allocate 204 cancelled mines and ensure smooth transfer of right, title and interests to the new allocatee to be selected either through an auction or allotment.

The Parliament passed the Coal Mines (Special Provisions) Bill 2015 on March 20, 2015 which replaced the ordinance.

Under the provisions of the Coal Mines (Special Provisions) Act 2015, the central government auctioned 31 coal mines in the three phases and allotted 42 coal mines central or state government companies.

It is estimated that Rs 3.44 lakh crore of revenue would accrue to states through coal mines auctions and allotments over 30 years from the three rounds of auction.

In the fourth phase of mines auction, which would begin next month, nine coal mines would go under the hammer.

Citing the increase in coal production as one of the primary highlights of his ministry during the year, the secretary said that augmentation of coal output has resulted in the reduction of import of fossil fuel.

"The coal production is now growing at around 9 per cent 8.9 to be precise. This has actually resulted in reduction of imports... It has also resulted in a situation where there is hardly any plants which are in a critical position and there is a balance of around 20 days inventory in most of the power plants," Swarup added.

CIL, which accounts for over 80 per cent of the domestic coal output, produced 321.38 million tonnes (MT) of fossil fuel during April-November period of current fiscal.

The company has assessed a tentative capital investment of Rs 57,000 crore for next five years to ramp-up its coal production to 908.1 MT from production level of 494.80 MT in 2014-15 as part of the road map for production of one billion tonnes coal by 2019-20.

In order to maintain the planned growth in production and evacuation of coal, during the year memorandum of understandings were signed among railway and coal ministries and governments of Odisha, Jharkhand and Chhattisgarh for development of rail infrastructure through formation of joint ventures.

Coal Projects Monitoring Portal has also been set up in the ministry to fast-track the clearances and pending issues of coal mining projects at state government as well as central government ministries.

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