YEAR ENDER 2014 - COAL
To usher in the much awaited reforms in the coal sector, soon after the Supreme Court judgment, the government swiftly promulgated the Coal Mines (Special Provisions) Ordinance 2014 for the management and reallocation of all the cancelled coal blocks through a transparent process . The Government took this as an opportunity to rationalize coal sector for mining operations, consumption and sale. The need of the ordinance was felt to overcome the acute shortage of coal in core sectors such as steel, cement and power utilities, which are vital for the development of the nation. In order to implement the provisions of the ordinance, rules were also notified so that efficient utilization of coal assets of the country in the national interest could be ensured. It led to a sense of certainty to the business environment and enhances credibility of the process.
In order to replace the Ordinance, the government introduced the Coal Mines (Special Provisions) Bill 2014 in the winter session of Parliament and got the approval of the Lok Sabha . The Bill envisages allocation of coal mines and vesting of the right, title and interest in and over the land and mine infrastructure, together with mining leases, to successful bidders and allottees through a transparent bidding process thereby eliminating discretion. The allocation of coal blocks would now be made in pursuance of the provisions of Ordinance and Rules made there under in a time bound manner to ensure that there is no disruption in supply of coal. To ensure transparency the entire auction process has been brought in the public domain. For the power sector, the methodology for e-auction of coal blocks will be completely transparent , encourages greater competition and efficiency and optimizes power tariffs. On 24th December ,2014, the government re-promulgated the Coal Mines (Special Provisions) Ordinance 2014 to pave the way for the auction process for 24 coal mines , which began on 25th December.
The focus of the Government is to increase coal production to the maximum extent possible by facilitating Environment & Forest clearances expeditiously, pursuing with State Government for assistance in land acquisition and coordinated efforts with Railways for movement of coal.
Coal India Limited (CIL)has been asked to ensure adequate supply of coal, accordingly it has committed to a target of 1 billion tonnes of coal production by 2019, from the current levels of 500 million tonnes. As for enhancing from existing mines a whole host of efficiency and productivity improvement initiatives, technological up gradation and better evacuation are being executed in a mission mode. In an effort to expedite laying out of three critical railway lines for coal transport in Jharkhand, Odisha and Chhattisgarh, both Ministries of Coal and Railways are working in tandem and monitoring the projects frequently. In addition the Coal India has decided to purchase 250 additional rakes worth Rs 5000 crore to evacuate greater quantities of coal primarily to power plants expeditiously. The process of rationalization of coal linkages was also to bring in efficiency and link power plants to nearest coal mines. A policy was also announced to allow automatic transfer of old and inefficient plants (more than 25 years old) to new super critical plants with a view to maximize power generation from minimum usage of coal. In order to resolve the disputes regarding quality of coal supplied to the power plants, CIL has agreed to provide an option to test at third party laboratories with test data being collected at unloading points. In order to clamp down coal pilferage, the government has proposed to establish a national coal dispatching centre and RFID tag for all coal movements.
The Central Mine Planning & Design Institute Limited (CMPDIL) which does the detailed exploration for CIL has signed an MoU with Mineral Exploration Corporation to enhance exploration capacity. Exploration in some blocks is also envisaged with the help of out sourcing agencies.
Some of the major initiatives of the Ministry of Coal are:
1. Coal Bill & Rules :
The government promulgated Coal Mines (Special Provisions) Ordinance 2014 in October to facilitate auctioning or allotment on of 204 coal blocks following the Supreme Court judgement. The Ordinance details the process the central government will follow in taking over the mines that had been allocated to privately-owned and public sector power, steel and cement companies between 1993 and 2010. It lays the provisions for public auction of the mines by way of competitive bidding thereby eliminating discretion. The ordinance provides that all the firms that had their coal blocks cancelled by the Supreme Court, barring those convicted for offences related to the allotment of mines, can bid in the e-auction after paying an additional levy. Firms running specified end-use plants like steel, cement and power, including the ones having coal linkages also qualify for the e –auction. A nominated authority will ensure the transfer of rights, interests and titles of these blocks and the auction money will accrue to it. A central government appointed officer not below the rank of Joint Secretary will be the nominated authority. In order to implement the provisions of the ordinance, Rules for auction or allotment of 204 Coal Blocks cancelled by the Supreme Court were notified after receiving comments from all stakeholders. The entire revenue from auction of mines will go to coal bearing states which are predominantly in the eastern parts of the country . This will help generate revenue for development of states like Jharkhand, Odisha, West Bengal and Chattisgarh as per stated objectives of the government.
2. Coal Production:
The annual target of the coal production for the year 2014-15 has been enhanced to 630.25 Mte. The production of raw coal in the country during the first half (April-September) of 2014-15 was 264.3 Mte compared to 246.4 Mte during the corresponding period of previous year. The overall growth in Coal production during April-September 2014 was 7.3 %.
The Production from Coal India Ltd (CIL) grew at 5.1% during April-September of 2014-15 to reach 210.7 Mte. This was 95.7% of the target set out of CIL for this period.
3. Rationalization of Coal Linkages:
A new Inter-Ministerial Task Force (IMTF) has been constituted on 13th June, 2014 to review rationalization of linkages. The terms of reference include a comprehensive review of existing sources as also feasibility for rationalization of these sources with a view to optimize transportation cost. IMTF will consider all cases in Power, Cement, and Steel/Sponge Iron sectors where the consumers are already getting coal.
4. Quality and Third Party Sampling:
To address the issues of dispute between coal companies and power utilities/developers and to bring about improvement in the quality of coal supply, the system of Third Party Sampling was further improved. Now, in addition to the Agency engaged by CIL a panel of reputed third party sampler has been jointly drawn up by a Committee consisting of representatives from power utilities and CEA with the concurrence of CIL and notified by CIL. Power utilities/developers will select and appoint the third party sampler from this panel. However, for billing purposes, sampling and analysis shall be done at the loading end by the agency. Payment for sampling shall be made by the power utilities/developers. 25 Agencies have been empanelled for Third Party Sampling. Power utilities like NTPC and others are in the process of selecting the third party agencies through tendering process.
5. Coal Washeries:
It has been decided that coal companies will ensure 100% supply of (-)100 mm size crushed coal to the power sector by strengthening the existing infrastructure for crushing coal and also through deploying mobile crushers through outsourcing. It has also been decided that coal companies would ensure supply of less than 34% ash coal (on quarterly average basis) to the power sector covering the thermal power plants located at 750kms away from pitheads and that located at 500 kms away from pitheads w.e.f 1st Jan ,2015 and 5th June ,2016 respectively through implementation of new washeries also through rationalization of linkages and utilizing washery capacities available in the private sector in consultation with consumers in a transparent manner.
6. Policy on transfer of linkage in case of scrapping of old units by replacing them with new plants:
Based on the recommendations of the Standing Linkage Committee (Long-Term) for Power, new plants will come up in a staggered way by the end of the 13th plan and may also spill over to the 14th plan, After implementation of this policy, it shall be possible to scrap old inefficient plants and replace them with modern efficient plants with super critical technology, having assured coal linkage. It would lead to more optimal use of coal.
7. Grant of the similarly placed power plants expected to be commissioned by March2015 requiring tapering linkage:
Six projects which were expected to be commissioned by March, 2015 were categorized under the similarly place power plants. These six projects are in the states of Punjab, Maharashtra, Madhya Pradesh and Odisha.
8. Study Group for Royalty constituted:
Royalty on minerals including coal is payable under the Mines and Mineral (Development and Regulation) Act, 1957 by the holder of a mining lease. A Study Group has been constituted to consider revision of rates of royalty on coal under the Chairmanship of Additional Secretary MOC and representatives from Ministry of Power, Mines, ClL, FlCCl, FlMMl and CMPDlL as member. The Study Group will give its report within six months.
Courtesy: pib.nic.in
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