Prospects for producing 1 bn tn of coal by 2025-26 have improved with announcement of a spend of Rs 50,000 crore
When the Union government announced in May an investment of Rs 50,000 crore to upgrade coal evacuation infrastructure in the country, it was acknowledging the anomaly of India meeting one-fourth of its consumption needs through imports despite having the fourth largest coal reserves in the world. As Prime Minister Narendra Modi found out during a review meeting for the sector last month, as much as 290 MT of coal could not be produced due to lack of evacuation infrastructure in the country – imports of coal stood at 243 MT in the last fiscal.
The move to create better evacuation infrastructure is part of the government’s target of producing 1 billion tonne of coal by 2025-26 – 729 MT was produced in FY20. In fact, the 1-bn-tn target was to be reached by 2020 and was pushed back only because of lack of infrastructure to evacuate such a quantity of the mineral. As is known, coal cannot be stocked at pitheads in large volumes owing to the fire hazard.
While the overall spend of Rs 50,000 crore would go into the development of coal handling plants, ports and strengthening of the transportation chain, building of conveyor belts and merry-go-round facilities which carry at least 21% of the mined coal directly from pitheads to power plants is a vital component of the agenda. Building rapid loading systems, developing siding connectivity, linking silos to railheads and creating rail links for coastal shipping constitute other heads of investment. “The proposed investments will include Rs 18,000 crore worth of investments in mechanised transfer of coal (conveyor belts) from mines to railway sidings,” Finance Minister Nirmala Sitharaman announced last month.
Seeking to bring down the share of roadways in coal transport to 18% given the costs and environmental concerns, as much as 60% of coal, the coal ministry has proposed, would be transported through rail infrastructure. The recent operationalisation of the 44-km-long Kharsia-Korichapar rail link in Chhattisgarh is an important development in this connection. A part of the proposed 136-km-long East Rail Corridor – Kharsia-Korichapar- Dharamjaygarh-Korba – the new link has enabled evacuation of coal from the Mand-Raigarh and Korba fields of the South Eastern Coalfields Ltd (SECL), Coal India Ltd’s (CIL’s) largest coal producing subsidiary. Of the targetted annual production of 1 billion tonne by 2025-26, SECL is expected to contribute 262 MT (26%), with commercial mining, which has been permitted by the government, accounting for another 250 MT.
The Chhattisgarh East Railway Ltd (CERL), a special purpose vehicle set up by the SECL, Chhattisgarh government and IRCON International Ltd, is developing the East Rail Corridor at an estimated cost of Rs 3,055 crore. While SECL holds a 64% stake in this tri-partite SPV, the Chhattisgarh government and IRCON have 10% and 26% stake, respectively. Synergy between the SPV players allowed the Kharsia-Korichapar line to be made operational in record time. The next leg of the corridor, the 30-km stretch between Korichapar and Dharamjaygarh, is likely to be ready by the end of this year. The corridor would be complete once the final stretch connecting Dharamjaygarh to Korba, a distance of 62 km, is made operational.
With the Kharsia-Korichapar link, which will boost supplies to power stations in Maharashtra and Gujarat, all the three important rail links the CIL had been pushing for – Jharsuguda-Sardega under the Mahanadi Coalfields Ltd in Odisha, and Tori-Shivpur under the Central Coalfields Ltd in Jharkhand being the other two – have materialised. These would allow evacuation of coal from fields with large reserves, playing an important part in CIL raising its output in the future.