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Interaction | August 2015

Success is subjective, we are eyeing complete domestic dependence

A task master in Delhi´s bureaucratic circle, Anil Swarup, Secretary, Ministry of Coal, has brought golden days to the black diamond sector of India. Saddled with ´Coalgate´, Swarup´s task was to make this sector clean. And, he did it by bringing in transparency, which has resulted in auctioning of 33 mines, and by ramping up production of CIL.

Power producers are in a good mood due to improvement in coal production and eradication of fuel shortage supply. Is it a success or are you hungry for more?
Success is subjective and we are trying our level best to get more transparency in the black diamond sector. To start with, we are looking at one billion tonne of coal production from the current level of 500 million tonne in the next five years. We have started the journey, and from the government´s perspective, the initial signs are encouraging. I am confident that we should be able to reach the envisaged target of the initiatives taken by us and their results, it may be wrong to term it success, as we do not want to limit ourselves on the present achievements. Going forward, we have the prime duty of making this sector the most sought after, by clearing all the basic impediments.

We understand that most IPPs have not signed PPAs as per entire mine capacities? What is the rationale behind this move?
As far as PPAs are concerned, there is no condition for any coal mines, to be used for the power sector or other sectors, so, I cannot comment on when they will sign 100 per cent capacity based PPAs. As far as the government is concerned, we have mandated that the coal has to be used for a particular purpose and for that particular project only.

Do you think that there is aggressive bidding in the coal sector, after the announcement of coal mines auctioning?
It is difficult for me to explain aggressive bidding because the aggression was not from the government side, it is only part of those who are bidding. So, in this case, the private coal miners, who have bid recently, are in a better position to answer what makes them to bid aggressively.

Apprise us on the third round of mining auction? How many mines will be auctioned in this phase and thereafter?
We will keep on identifying mines and keep it ready for future auctioning. At present, in the third round of auctioning, we have identified 10 mines. All these have been kept aside for unregulated sector and the auction will take place anywhere between August 11-17, this year.

So far, we have auctioned about 33 mines, of which four have been disputed in court and the rest have bid out successfully.

We have witnessed coal imports on a marginal decline mode. Will this decline continue?
Basically, if more coal production happens, the decline in coal import will take place, as this has increased in the first place due to shortage of coal within the country. So, if India produces more coal, it will automatically eradicate the requirement of imported coal all together. Our present objective is to complete wipe out the necessity or over dependence on imported coal by increasing coal production domestically. Meanwhile, we even want to erase misconceptions about the quality of coal, as the available coal is as equivalent compared to imports.

There seems to be encouraging news as CIL surpassed other PSUs in market capitalisation.
To be honest, I am extremely happy with the manner in which Coal India is working. However, when it comes to market capitalisation, it is determined by market forces, and the government has no say in it. But what is most encouraging for CIL, is the increase in coal production from CIL in financial year of 2014-15, which was 32 mt as against 31 mt in the last four years, cumulatively. Meanwhile, in the quarter ended June 2015, CIL has produced than 12 mt.

There must be some supporting elements that helped CIL improve their coal production?
Absolutely! There are elements such as acquisition of around 2,000 hectares of land, in addition to receiving 41 environmental clearances. So, both the factors together, have helped Coal India in its production ramp up, due to which most of the power plants are in a very comfortable position today. Importantly, most of them have more than 20 days of coal.

CBM issue comes under control of the Petroleum Ministry, how have you worked with them to exploit this option?
Both the Petroleum and our Ministry have been discussing how to exploit coal bed methane (CBM). In this case, a Cabinet note has been moved. It would be wrong to divulge any details on it as it is in the Cabinet. Meanwhile, the timelines can be only given by the Petroleum Ministry as it comes under their purview. All I can say is that our ministry has been consulted on every issue regarding CBM. It is also premature for me to comment on whether all coal mines held by CIL or other PSUs, JVs and private companies will come under this framework.

What is GoI considering to improve share of underground coal mining in India, which has slumped in the last decade?
Currently, underground coal mining is facing challenges of resources and lack of machinery. The most prevalent method of coal mining in India is open-cast or surface mining, used for extracting coal deposits at shallow depths. It´s a more efficient process than underground mining, as the latter needs highly technical expertise and greater investments. We are making attempts to see how the new technology (long haul) could be brought in, and where in underground mining it could become an economically viable proposition for private players, because underground mining activities are more environment friendly as against open-cast.

Take us through the new coal supply policy that GoI is likely to come out with to force inefficient power units to switch off...
What we are trying to do is identify the various categories of entities that use coal in the power sector´one that have PPAs and others who have fuel supply agreement in place. But there are other power units who still do not have FSAs in place. So, we will earmark a certain amount of coal to be used by such entities through e-auction. Therefore, the coal would also become available to such units, sorting out supply issues. Certain quantities (5 MT) have been earmarked initially, and the level can be reconsidered once we start the e-auctioning process.

At present where are we placed in last mile connectivity?
We have already signed MoUs with two states—Jharkhand and Orissa, where the special purpose vehicle will be set up within this month, which will then execute the railway projects. Initially, we have identified 60 rail link projects and the project numbers may increase in the later stage of development.

Meanwhile, I am very happy to share with you that Jharsuguda-Barpali rail line, which is one of the three major railway lines for evacuation of coal in the country, has progressed well. The first phase single line will be completed by June 2016. In addition, Coal India will be adding 200 rakes over the next four years, through its own funds, and orders have already been placed for 34 rakes.

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