PMO for dereserving coal blocks of CIL

New Delhi, Jan 5 | Updated: Jan 6 2006, 06:13am hrs
The Prime Ministers Office (PMO) has supported the recommendation of the Ratan Tata-headed Investment Commission to dereserve some of the coal blocks under Coal India Ltd(CIL) in favour of Central and state government companies for mining.

Of the 289 blocks reserved for CIL, 229 have been explored. Only 150 are, however, planned for production up to the end of 11th 5-year plan (2011-12) and the balance 79 are yet to be taken up for production.

The de-reservation, according to sources, is part of the PMOs strategy to bring more players and capital in the mining sector, even as the contentious issue of privatisation is in abeyance. Coal shortage is threatening to jack up the cost of thermal power generation, which has led the Tata-led panel to explore various options.

During a recent meeting in the PMO on the initiatives suggested by the commission in the power sector, it was proposed that to increase coal supply, the 79 blocks already explored in detail but not planned for production till the end of the 11th Plan by CIL, should be made available to government companies for mining.

A senior government official said the PMO supported the proposal and felt that there was ample justification for dereserving some blocks.

The official said CIL has already agreed in-principle to allot six coal blocks to NTPC for production during the 11th Plan itself. The estimated coal reserve of these blocks ranges from 200 million tonne to 1,900 million tonne.


Units with low plant load factor of 40% must be sold or leased out
Fuel linkage must be provided to idle plants with significant capacity
Shortlist investors to put up coastal plants that can operate on imported coal

Take over of such poorly performing power plants is in the interest of the sector
Cost of alternative fuels is high, so duty waivers on LNG may be extended
Four sites, including two coastal, identified. Bids to be invited for lowest tariff

Options like leasing,JVs and takeover must be explored
A note will be sent to the PMO on sales tax and customs waiver on LNG
A note to be submitted by power ministry to PMO within in a month

However, the officials clarified there has been no policy decision for allotment of blocks reserved for CIL to central and state government companies. The PMO has asked the ministry of coal to comprehensively examine the issue and send a report, an official said.

The governments seriousness about enhancing coal production is justified in the wake of expected shortages in coming years.

According to the Planning Commission, against the total coal production of around 382.14 mt during 2004-05, the demand-supply gap would widen to 60 million tonne by 2011-12.

The Planning Commission has assessed that for 2005-06, the total raw coal demand would be 445.65 mt whereas the total availability from indigenous source is estimated at 406.48 mt, leaving a gap of 39.17 mt.