India is heavily dependent on coal and to meet its energy requirements and as per one estimate the country will require about 2 billion tonne of coal per annum by the year 2030-31, which means a four to five fold jump from the current level of 450 million tonne.
Resource Digest spoke exclusively to Alok Perti, Additional Secretary, Ministry of Coal, who is also the Government nominee on the CIL board, about the future course of action. Excerpts from the interview.
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What is the scenario of coal block allocation?
At present, the coal block allocation is stuck. Our proposed bill on coal block allocation will be placed before the Parliament in the next session, where we are proposing competitive bidding as the criteria for the allocation. The highest price definitely will be biggest criteria, but we will also see the credentials and financial strength of the party.
As part of coal reforms, the Indian government allocated 208 coal blocks to public and private companies for captive use since 2003, but only 26 of them are producing less than 40 million tonnes of coal. Six blocks have been de-allocated. Their last year's performance has been fairly dismal.
In some cases, the reason behind any delay or not starting the production is because of not getting the environmental clearances. Ultimately, the investors have a serious point because they have already made the investment. The Prime minister's office (PMO) is now looking into this issue of Environment Ministry's decision of creating no-go areas of mining. This issue hopefully will be resolved soon.
But Coal Ministry is also issuing linkages to various consumers, whereas Coal India says it doesn't have enough coal to supply. Comment.
There is a genuine shortage of coal. On the basis of recommendations of Central Electricity Authority (CEA), the Coal Ministry gives linkages to various consumers. On the basis of availability, Coal India Ltd signs annual supply agreements. Because of coal shortage, CIL has been recommending the prioritization. Like recently, CIL had objected about 5 power plants, which are getting built on imported coal, even when we have allotted 30 per cent of domestic coal also. CIL's point of view was that these plants have installing equipment which can handle and blend imported coal. Whereas, there are various power plants, which don't have these equipment. Some problem on linkages and supply will be there for sometime as the process of prioritization will continue.
Have you found enough success in acquiring coal assets abroad?
Yes, we have made satisfactory progress in abroad. Certain company's and assets have been identified and Coal India has already floated an Expression of Interest. The company's teams of bankers, technicians, consultants are on the job. But definitely, the process should be much faster.
Moreover, we have a restriction of investing only in listed companies. By the time we overcome with tendering, diligence, the properties are taken away by our competitors, mostly China. Even International Coal Ventures Ltd (ICVL), a special purpose vehicle formed jointly in 2008 by SAIL, NTPC, Coal India, Rashtriya Ispat Nigam Ltd and National Mineral Development Corporation, has not made much of a dent since it began operations.
The prime ministers office under leadership of V Krishnamurthy plans to come out with a new policy to expedite this whole process. The whole idea is to create a good and reliable method, both from financial, legal and physical aspects. And, if necessary, the government has to give more autonomy to the PSU's, to come out of the no-risk approach.
Do you think the no-risk approach is an outcome of vigilance fear?
Acquisition of global asset is our national priority. If there is any delay in that, the whole nation will pay the price for it. Since our domestic production cannot match the growing demand, we'll have to acquire assets abroad. Our next generation will not spare us, if we do not create proper supply to fill up the gap at a right price.
But it is a fact that senior PSU officials sometimes take a no-risk approach. Just because of fear of vigilance, we can't afford this. We have to take the risk and create a powerful decision making panel so that vigilance enquiry is not deterrent in this process.
Is there something happening in coal mining modernization?
To improve the coal mining operations and to enhance production, we have to go to the process of modernization of coal handling plants. But this is also not happening too fast because of no-risk approach. On every business decision, some complaints are generated. Moreover, the process gets slowed down, followed by some action by the vigilance authority. The fact remains, we cannot slow down our priorities like this, if that happens, the country will suffer acute power shortage. We will have to take the risk of doing things faster and for that whatever government needs to do, it will have to do it fast.
Amendment of CVC Act is one option. Because, if we don’t produce enough coal and tie up for enough coal supplies from abroad, we might have to live literally in the darkness.
Resource Digest spoke exclusively to Alok Perti, Additional Secretary, Ministry of Coal, who is also the Government nominee on the CIL board, about the future course of action. Excerpts from the interview.
What is the scenario of coal block allocation?
At present, the coal block allocation is stuck. Our proposed bill on coal block allocation will be placed before the Parliament in the next session, where we are proposing competitive bidding as the criteria for the allocation. The highest price definitely will be biggest criteria, but we will also see the credentials and financial strength of the party.
As part of coal reforms, the Indian government allocated 208 coal blocks to public and private companies for captive use since 2003, but only 26 of them are producing less than 40 million tonnes of coal. Six blocks have been de-allocated. Their last year's performance has been fairly dismal.
In some cases, the reason behind any delay or not starting the production is because of not getting the environmental clearances. Ultimately, the investors have a serious point because they have already made the investment. The Prime minister's office (PMO) is now looking into this issue of Environment Ministry's decision of creating no-go areas of mining. This issue hopefully will be resolved soon.
But Coal Ministry is also issuing linkages to various consumers, whereas Coal India says it doesn't have enough coal to supply. Comment.
There is a genuine shortage of coal. On the basis of recommendations of Central Electricity Authority (CEA), the Coal Ministry gives linkages to various consumers. On the basis of availability, Coal India Ltd signs annual supply agreements. Because of coal shortage, CIL has been recommending the prioritization. Like recently, CIL had objected about 5 power plants, which are getting built on imported coal, even when we have allotted 30 per cent of domestic coal also. CIL's point of view was that these plants have installing equipment which can handle and blend imported coal. Whereas, there are various power plants, which don't have these equipment. Some problem on linkages and supply will be there for sometime as the process of prioritization will continue.
Have you found enough success in acquiring coal assets abroad?
Yes, we have made satisfactory progress in abroad. Certain company's and assets have been identified and Coal India has already floated an Expression of Interest. The company's teams of bankers, technicians, consultants are on the job. But definitely, the process should be much faster.
Moreover, we have a restriction of investing only in listed companies. By the time we overcome with tendering, diligence, the properties are taken away by our competitors, mostly China. Even International Coal Ventures Ltd (ICVL), a special purpose vehicle formed jointly in 2008 by SAIL, NTPC, Coal India, Rashtriya Ispat Nigam Ltd and National Mineral Development Corporation, has not made much of a dent since it began operations.
The prime ministers office under leadership of V Krishnamurthy plans to come out with a new policy to expedite this whole process. The whole idea is to create a good and reliable method, both from financial, legal and physical aspects. And, if necessary, the government has to give more autonomy to the PSU's, to come out of the no-risk approach.
Do you think the no-risk approach is an outcome of vigilance fear?
Acquisition of global asset is our national priority. If there is any delay in that, the whole nation will pay the price for it. Since our domestic production cannot match the growing demand, we'll have to acquire assets abroad. Our next generation will not spare us, if we do not create proper supply to fill up the gap at a right price.
But it is a fact that senior PSU officials sometimes take a no-risk approach. Just because of fear of vigilance, we can't afford this. We have to take the risk and create a powerful decision making panel so that vigilance enquiry is not deterrent in this process.
Is there something happening in coal mining modernization?
To improve the coal mining operations and to enhance production, we have to go to the process of modernization of coal handling plants. But this is also not happening too fast because of no-risk approach. On every business decision, some complaints are generated. Moreover, the process gets slowed down, followed by some action by the vigilance authority. The fact remains, we cannot slow down our priorities like this, if that happens, the country will suffer acute power shortage. We will have to take the risk of doing things faster and for that whatever government needs to do, it will have to do it fast.
Amendment of CVC Act is one option. Because, if we don’t produce enough coal and tie up for enough coal supplies from abroad, we might have to live literally in the darkness.
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