Despite many competing alternatives, coal continues to be the prime source of energy for the Indian industry. Although the country has abundant coal reserves, production of this fuel is not keeping pace with the sharp increase in demand. One reason for this is the fact that a major part of India?s known coal reserves are non-recoverable. But a policy paralysis is also blamed for the situation. Energy experts feel the need to push the rate of growth of coal production to 17% with the privatisation of coal mining. Production increase has to come from induction of modern mining equipment and through the adoption of new technologies?underground coal gasification (syngas), coal-to-liquid etc. Import of coal is on the rise thanks to the widening demand-supply gap. Coal from certain foreign sources tends to be cost-effective to thermal power stations at coastal areas. With the high ash content (18-45%) of Indian coal, some consumers opt for the imported coal to tap its high calorific value.
The domestic coal sector has been in the news lately on account of the sharp differences between the coal and environment ministries over green clearances to mines. Union coal minister Sriprakash Jaiswal has been in the thick of a debate over growth versus environmental concerns, and has been actively pushing for an agenda that strikes the right balance between the two goals of the government. He has been successful in getting the government to agree to set up a group of ministers (GoM) to formulate a long-term strategy on coal mining for enhancing production to meet the growing demand from user industries, while at the same time adopting practices that make mining activity sustainable. The minister?s efforts on this front were perhaps one reason for his elevation as Cabinet minister recently. In an interview to Subhash Narayan and KG Narendranath, Jaiswal speaks about the immediate concerns of the sector and the future of coal as an energy source.
Coal is a vital fuel source for the power sector and it will continue to remain the prime source of energy in the country for next several years. Tell us about your action plan to augment the domestic coal output?
In the last one decade, production of coal has only increased gradually, even as it is clear that coal will continue to remain the prime source of energy in the coming years. About 55% of the country?s primary commercial energy requirements (against the global average of 29%) and 70% of its power generation depend on coal. And, in future, the contribution of coal to the fast-growing economy?s energy mix will grow substantially. I mean even the relative share of coal in the energy mix would increase.
Under these circumstances, it becomes imperative to continue with our efforts to increase domestic coal production. This is being done by the use of advanced technology, which can enhance production from existing mines and development of abandoned mines and underground mines that have the potential to give output with the least damage to environment. In addition, Coal India is also looking for coal assets abroad from where a portion of the output can be brought to India.
The option of imported coal also exists but it is an expensive route as coal prices abroad are 1.5 to 2 times the prices of domestic coal variants. Large scale imports could jack up power tariffs. I feel that coal imports should be undertaken largely for coastal plants where the route remains economical.
Are you indicating that the government wants some kind of check on coal imports?
I am not suggesting restriction on imports as the current domestic production is far lower than demand, which continues to rise sharply. But the government reckons that the import route should be used intelligently so that cost structures in the domestic market are not unduly disturbed. Imports can hardly be avoided in the present context and it is also likely that imports would increase further in the coming years. As per an estimate, coal imports would rise 10-20% annually for next few years, and value-wise the surge could be even 50% a year. Imports this fiscal are expected to cross 80 million tonnes.
Is there a fear that your current stand-off with the environment ministry over a green nod to coal mining projects would impact production sharply?
The fear is genuine as environmental hurdles would foil efforts to augment coal production and lead to stagnation in output. Coal India has already apprised us of the adverse impact on its plans from the environment ministry?s categorisation of coal bearing areas as go and no-go zones. The growth in coal production is already down to 2% in the current year as against 7% last year. We fear that if the issue is not adequately addressed, the production growth will fall further next year. We have already moved a note for the Cabinet highlighting the problems. The Prime Minister has also set up a group of ministers (GoM) to find a solution within a period of two months. Meanwhile, we are also holding talks with the environment ministry to find a lasting solution.
What is the level of losses that the industry could suffer if the go and no-go policy is implemented?
Let me make it clear that go and no-go areas have been determined on the basis of a study of nine coalfields in the country. If we take only these nine coalfields, the categorisation would restrict mining in close to 160 coal blocks with production potential of 660 million tonnes. This is enough to fuel power generation capacity of 1,30,000 MW.
I feel that the wide gap between coal demand and supply (about 70 million tonne now) could largely be addressed by increasing production from domestic coal blocks. We can manage the gap of 10-15 million tonne per year if domestic production is not restricted. The present gap can be largely attributed to non-availability of environment and forestry clearance in time.
Is it true a stand-off between you and the environment minister Jairam Ramesh is preventing resolution of the issue?
Let me make one thing very clear. The coal ministry is not completely against the stand taken by the ministry of environment and forest (MoEF) on a green nod to mining projects. We should appreciate that if the environment ministry is not strict now, it could create big problems in future. We are for mining with a human face through a socially sustainable inclusive development. Our only suggestion is that the decisions and the stands taken by MoEF should be pragmatic so that the country?s coal production does not suffer and at the same time environmental concerns are addressed. If we stop coal mining activities all of a sudden, then how we will give employment to our people and continue industrialisation? We need to have a balance between growth aspirations of the country and environment protection.
New technologies are being implemented in coal sector globally. Are we also exploring these?
Yes, we are in regular touch with global developments to adsorb some of the latest technologies in our mining operations. One new area that has caught our attention is the coal liquefaction programme where coal is processed to generate oil. In my recent trip to South Africa, I visited a facility being run by Sasol and was amazed to see the potential of the liquefaction technology. Two capital-intensive projects of this technology are already being implemented by Jindal group and the Tatas. The ministry has also asked Coal India to set up coal-to-liquid plant. This would need an investment of close to Rs 45,000 crore and we will fully support CIL?s efforts in this direction, including a possible tie-up with a global technology leader and/or an equity partnership with an Indian energy consumer.
We are also focusing on underground mining and coal gasification projects. There is a joint venture between CIL, Gail India and fertiliser firm RCF to set up surface coal gasification projects for fertiliser production. To acquire syngas technology, dialogues are on with the US, EU and Russia.
Are you in favour of amending the existing legislation to allow commercial coal mining by private players?
There is no move in this direction at present. But I am not ruling out the possibility of such a policy change in the future. The necessary legislation for opening the coal sector to the private sector is already pending in Rajya Sabha. Our government also set up a GoM to examine the issue during UPA-1. We will request for revival of that GoM to take the process forward. However, it needs to be recognised that this is a policy matter that needs to be debated thoroughly before being implemented.