ENDER 2014 - COAL
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
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.
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 &
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.
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 %.
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
Rationalization of Coal Linkages:
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.
and Third Party Sampling:
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.
Policy on transfer of linkage in case of scrapping of old units by replacing them with new plants:
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:
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.
Study Group for Royalty constituted:
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.