Unveiling an ambitious plan to make the country self-sufficient in coal, the government on Friday said Coal India will augment output at a compound annual growth rate (CAGR) of 12% and produce an annual 1 billion tonnes by FY20. Central to the strategy will be a more cohesive coordination, enabled through special purpose vehicles among CIL, the railways and coal-bearing states to remove the evacuation bottlenecks that currently hamper production at existing mines.
The move comes at a time the captive coal mines are being lapped up by the country’s leading private sector companies and together they are expected to produce 200 million tonnes of coal annually in two to three years as production peaks.
Coal India chairman Sutirtha Bhattacharya said Coal India will form SPVs with the states governments concerned and the railways to develop the rail network, especially last-mile connectivity to pitheads. States like Odisha, Chhattisgarh and Jharkhand are already on board for the plan, he said, adding that CIL will have a 64% stake in the proposed companies where the railways’ stake will be 11%. West Bengal and Uttar Pradesh could also roped in for the venture, Bhattacharya said.
He added that CIL, with an annual capital expenditure of around R6,000 crore for technology upgrades in opencast mines, will additionally invest a similar amount for equity infusion into the proposed SPVs.
“The coordination with the railways for implementation has already been initiated. SECL (South Eastern Coalfields, one of CIL’s arms), already has two SPVs with state governments. More SPVS are to be set up to build the rail infrastructure,” Bhattacharya said, adding that the the company was counting on timely completion of three critical railway lines, land acquisition and green clearances through these SPVs.
Coal India has been having a tough time in acquiring land for new projects, a problem that prompted the Maharatna to petition the government last year saying: “It (the target of 1 billion tonnes) would indeed be challenging in view of the progress being made. The government will have to ensure that both ongoing and new projects get requisite land in a time-bound manner since the gestation period involved in ramping up production after the possession of land is about three to five years.”
As FE reported earlier this month, lack of coordination between the railways and CIL had prompted private power producers to urge the power minister to look into the the slippages in delivery of coal, leading to developers not receiving the contracted quantity of the fuel. The railways and CIL have often blamed each other for not being able to deliver the contracted amount of coal.
Additionally, CIL also provided the estimated increase in output from its subsidiaries by FY20, with Mahanadi Coalfields and SECL expected to contribute nearly half of the target of 908 million tonnes from the existing mines. The gap would be bridged by newer projects that would be undertaken in the coming months. While the coal miner expects to mine 556 million tonnes in FY16, up nearly 10% from current fiscal, the country’s projected coal demand is pegged at around 1,200 million tonnes by 2019-20, at an envisaged CAGR of 7%.
CIL, sources said, envisages taking up 126 new projects with an estimated maximum output of 375 million tonnes per annum in addition to 149 ongoing ones. Only 49 of these projects have already been approved by the firm after techno-economic studies. The rest of the projects are being considered by the firm and its respective subsidiaries.