1. Coal target looks ambitious

Coal target looks ambitious

Centre yet to take states on board in clearing land hurdles

By: | Updated: January 14, 2015 1:17 AM

The coal ministry has given Coal India Ltd the target to double its output by 2019, a move that should be hailed for its boldness given that the PSU is struggling with production. However, on a closer scrutiny of CIL’s pipeline of new blocks which are expected to contribute the bulk of additional production, the target appears a bit optimistic. The reason is, most of these projects are caught in land acquisition hurdles and running behind schedule by up to five to seven years.

These projects are unlikely to start production on time unless their land acquisition issues are addressed quickly. The Centre will have to get state governments to facilitate land acquisition for these projects. However, there is little incentive for state governments to go the extra mile to lend support to CIL projects and , according to sources, the Centre has not put in place any mechanism to get states on board.

Coal secretary Anil Swarup in October reviewed the development status of CIL’s 25 upcoming blocks with a combined potential to produce nearly 230 million tonnes of coal. It emerged from the review that most of the projects are unable to move due to difficulty of acquiring land.
CIL has identified 126 new projects to take up during the current 12th Plan period (April 2012-March 2017) with a production potential of 438 million tonne. Out of these, 60 are projected to contribute about 88 million tonne of coal during 2016-17. If these projections go wrong, the goal of increasing domestic coal production to 1 billion tonne by 2019 could remain elusive.

Coal-India

Significantly, CIL has consistently failed in meeting its annual output target in recent years. It was mainly because the PSU failed to start new projects or expand capacity at existing ones due to land acquisition issues.

Meanwhile, the coal ministry is pursuing auction of captive coal blocks deallocated by the Supreme Court with a missionary zeal to increase domestic coal availability for industry. However, the million dollar question is, will these captive mines be able to secure clearances and acquire land on time to ramp up production? The way state-owned NTPC has struggled to acquire land for its captive mines does not offer much hope for other players.

CIL accounts for 80% of domestic coal production and any big shortfall in its output target could necessitate a sharp hike in the country’s coal imports, which is already growing at 18% annually. It is high time the Centre came out with a credible idea to secure the active support of state governments in expediting land acquisition for coal mines, besides addressing issues of last mile connectivity and rake shortages.

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