For the first time in four decades, India may open up commercial coal mining to private firms in the new year with the government keen on gradually moving out of the end-use restrictions and cutting down on dependence on imports. “Yes. I think we could look at that. There is some interest in commercial mining. We are also keen that gradually the country moves out of these end-use restrictions and all these controls because we are seeing the surplus situation. I don’t see for the next many years, the country will have any shortages of coal,” Coal and Power Minister Piyush Goyal told PTI.
His Ministry sees the country’s dependence on import of fossil fuel coming further down in the New Year.
“In such a situation, I think gradually my next step will be to move out from these end-use restrictions and hopefully in a year or two, we may be in a position that we don’t need to have any restrictions. Coal could be an open commodity,” the minister asserted.
Asserting that challenges are in some people’s mind and he sees no challenges in the coming year in the coal sector, Goyal exuded confidence that the output of the fossil fuel would witness a good growth in 2017.
“I see no challenges (in the coal sector in 2017). Challenges are in some people’s mind. For me, these are all opportunities,” the Minister said.
“To my mind, we will see good growth in 2017 both in consumption of electricity, particularly thermal as well as the production of coal and bring down the imports even further,” Goyal said.
The government’s focus in the coming year would to implement all the plans for clean coal so that more washeries are on line. The Coal Ministry would also flex its muscles to see how coal mine operation could be made environment-friendly.
“Our focus for (2017 will be)…to see how coal mines operation can be made environment-friendly so that the people who work there, the villagers around there, don’t have to suffer from pollution effects — to see how the water that come out of the coal mine can be processed so that we don’t damage the water quality and the ground quality by injecting bad quality of water in the ground or into the rivers,” he said.
“So this is going to be a year where coal will integrate itself with the environmental efforts, with the big push that the Narendra Modi government is giving for cleaner environment in the country,” he added.
Elaborating on achievements for the year drawing to a close, Goyal said that the coal sector today has a surplus position and after Prime Minister Narendra Modi’s government came to power, India has moved from the country of perpetual shortages to the nation of surplus dry fuel.
Amid surplus coal, the Minister said that there were no plans to scale down the one billion tonnes production target for Coal India (CIL) which accounts for over 80 per cent of the domestic coal production.
“We would like to ramp up coal production and as the economic activity picks up, people will stop depending on imports. I think coal sales will only go up. I don’t see any reason to scale down the one billion tonnes of coal production,” the Minister said.
CIL is eyeing one billion tonnes of coal production by 2019-2020.
According to Sabrin Chowdhury, Commodities Analyst, BMI Research, the government’s inability to push through the land acquisition bill could limit the development of coal infrastructure, which may hamper the output growth of fossil fuel over the coming years.
The opening of new mines could remain hampered if environmental hurdles are not cleared in an expedient manner, Chowdhury added.
“Low coal prices will limit investment from entering the sector. We forecast coal prices to average USD 63.0/tonne during 2016-2020, significantly lower than USD 87.0/tonne during 2011-2015,” Chowdhury said.
Government took several steps to further push the progress made by Coal Ministry in the last year. In line with the mine auctions of 2015, so far 83 coal mines have been allotted with an estimate of more than Rs 3.95 lakh crore over the life of the mine/lease period, which shall be devolving entirely to the coal bearing States.
The actual revenue generated from these coal mines up to October 2016 is to the tune of Rs 2,779 crore.
Moreover, five coal blocks were allocated to government companies/corporations for the end-use power and two coal blocks for commercial mining during January 2016 to November 2016.
The production of raw coal in the country during April-November of 2016-17 was 391.10 million tonnes (MT) against 385.11 MT during the corresponding period of previous fiscal.
As a first step towards commercial mining, 16 coal mines were put on offer for allotment to state public sector undertakings for sale of coal/commercial mining. Out of these mines, eight blocks were earmarked for state PSUs of host states while the rest eight mines were earmarked for State PSUs of non-host states.
Subsequently, five coal mines have been successfully allocated to State PSUs of coal bearing host States and two coal mines have been successfully allocated to State PSUs of other than host States for sale of coal.