Coal corridors stare at delays as costs escalate beyond CILs budget

Written by Indronil Roychowdhury | Kolkata | Updated: Jan 5 2013, 05:47am hrs
The Union coal ministry is worried about the delay in implementing coal evacuation corridor projects as cost escalation is going way beyond Coal Indias (CIL) budget for spending on rail infrastructure.

CIL has planned an expenditure of R5,000-6,000 crore for implementing six coal corridor projects for evacuating coal in greater amounts.

A coal ministry official told FE that according to the ministry's estimates, the cost of the three coal corridor projects has already increased three-fold, from R2,000 crore to R7,000 crore, due to slow implementation. Indian Railways is constructing Tori-Shivpur-Kathotia, Bhupdeopur-Korichhaapar and Jharsuguda-Barpali coal corridor projects in Jharkhand, Chhattisgarh and Orissa, respectively, for evacuating coal from North Karanpura, Mand Raigadh and IB Valley coal mines. The three corridors can evacuate 300 million tonne of coal per annum, enabling CIL to evacuate 600mt in a year by the end of the 12th Plan period. But the slow pace of progress doesnt bode well for CIL as far as achieving its target by 2017 is concerned.

Additional coal secretary Zohra Chatterjee had earlier said that CIL had earmarked R6,000 crore to invest in six coal corridor projects. But this budget is proving to be insufficient for even three projects, an official said.

Coal minister Sriprakash Jaiswal has already written to railway minister Pawan Kumar Bansal, seeking his intervention to fast track the projects. The letter, according to the ministry official, stated that a number of new projects in IB Valley under Mahanadi Coalfields (MCL) in Orissa are unable to start production due to delays in railway projects. In the absence of railway projects, MCL cannot start commercial production. CIL is missing out on 15% of the valleys capacity due to lack of railway logistics, Jaiwsal had pointed out in his letter. He, however, didnt mention the ministrys concern about cost escalation in the letter.

CIL can produce an additional 11.2mt per annum from IB Valley if evacuation is facilitated. IB Valley has untapped reserves of 75mt and CIL has already undertaken new mining projects to lift at least 15% of the total reserves every year.

CILs target of producing 556.6mt by the end of the 12th Plan period also takes this production into account. The coal ministry views the slow pace of progress in implementing coal corridor projects as a constraint in enhancing coal supplies to the country. The working group on power has projected a shortfall of 286mt by the end of the 12th Plan period with projected demand touching 842mt.

The shortfall in FY13 has been pegged at 192mt, with CIL keeping a production target of 468.74mt and offtake target of 474.70mt.

A CIL official said the railways will be the implementing agency, but there could be other equity holders, such as NTPC, SAIL and RINL, in corridor projects, especially for the project in Chhattisgarh. The revenue-sharing from freight charges could be based on equity holding. CIL will also invest R900 crore to create roads for linking mines with the proposed railway tracks.