Easier land acquisition norms, pvt sector participation needed

Written by Sharad Raghavan | New Delhi | Updated: Jun 4 2011, 03:57am hrs
A non-descript washery to clean coal of its ash content near Raigarh, the centre of the coal belt in Chattisgarh state has recently fenced itself around for reasons of security. The manager of the washery said it provides a nice target for Naxalites who are otherwise mostly confined to the hills.

The demand for washeries is the latest in a series of steps India has been pushing to extract more from its coal reserves. From a crude crisis at the beginning of the new century, India has neatly leapt into a coal crisis in eleven years. The Indian energy sector overwhelmingly dependent on coal, with over 50% of the primary commercial energy is now coming to terms with a shortage it just wasnt prepared for.

Eleventh Plan documents show around 74% of the coal produced in India is used for power generation. With over 70 years left for Indias coal reserves, it is only natural that the 11th Five-Year Plan aspired to augment domestic production in the long term, keeping in mind the sharp increase in demand and the long gestation periods of coal projects. With the mid term analysis of the 11th Plan out, an analysis of the coal sector shows that the 11th Plan has so far fallen short of its objective. In short, production is less than what it is supposed to be, and consequently, coal imports are higher than planned.

According to the 11th Plan, coal production in the period 2007-2012 was supposed to be 680 million metric tonnes (MMT). According to the mid-term analysis (MTA), the actual figure produced will be only around 630 MMT, a shortfall of around 50 MMT. This, when the demand for coal in this period was projected to be 731 MMT. A year-wise analysis of coal demand and production shows that in 2007-08, the shortfall was 47.14 MT, in 2008-09 it was 52.78 MT and provisional data for 2009-10 showed the shortfall at 65.65 MT. This shortfall in production might have been one reason for the otherwise inexplicable squaring down of the total target production for the 11th Plan from 731.10 MT to 713.24 MT.

A break up of the coal sector yields more specific data and points to the various areas that require attention. In the case of coking coal, the Planning Commission notes that the requirement has long exceeded the supply from domestic sources. Coking coal imports were at 21.08 MT in 2008-09. This is expected to almost double to 42 MT during 2011-12, the terminal year of the 11th Plan. The problem here is a basic one, with Bharat Coking Coal Limited unable to boost its production of the required quality of coking coal, and so is unable to meet the desired feed of the coking coal washeries. Fixing this is also basic in nature, provided land acquisition issues are addressed on a priority basis. Opening new coking plants would also augment BCCLs production.

Exploration is another area where significant work can be done to increase Indias coal production. Out of 17,300 sq km of potential coal bearing area, by the end of the 10th Plan, 11,865 sq km had been covered. Of the remaining area, 866 sq km is to be covered in the 11th Plan. Here, again, the issue of environmental and forest clearances rears its head. The existing guidelines of the Ministry of Environment and Forests permits only 1-15 boreholes per square kilometre. According to the Planning Commission, this number has to go up to at least 15-20 boreholes per square kilometre. Also, the scheduled time for environmental clearances is 210 days, and 150 days for forest clearances. In truth, the time taken getting these clearances runs between 2-6 years. Naturally, this needless delay hampers coal production.

Apart from the scope of exploration in terms of area, the scope in terms of depth must also be re-looked at. Current mining practices are limited to 300 metres while around 40% of Indias coal reserves are beyond this depth. Improving technology and increasing the borehole density will likely address this issue.

Looking at all these factors, it is not surprising that Indias coal imports have been rising. Against a total of 43.08 MT in the terminal year of the 10th Plan, imports in the terminal year of the 11th Plan were projected at 51 MT. Subsequently, however, this projection has been revised to 83.33 MT, accounting for 11.7% of the estimated demand, as against the previously projected 7%. This dependence on imports is only going to increase, according to the Planning Commission, due to the quality of domestically produced coal (40% ash content compared to 10% in imported coal) as much as the shortfall in domestic production.

So, what can be done to address the myriad issues plaguing the coal sector First, the development work at captive blocks must be hastened. For this, land acquisitions for coal projects must be made easier, and the process of getting environmental and forest clearances must be expedited.

Also, if, as the Planning Commission predicts, Indias dependence on imported coal is only going to increase, then infrastructure issues such as coal handling facilities at ports and availability of railway rakes must be addressed. One possible idea of the Planning Commission was to open up coal mines for private sector exploitation beyond the captive use currently allowed. Since private exploitation of petroleum resources is allowed, there is no reason to stop it in the coal sector. Technology to exploit the 40% of reserves below 300 metres must also be developed. If the government implements these measures in the 12th Plan, India will be well on its way to meet its coal demand.