The Ministry of Coal plans to continue expanding production capacity, but it has also chalked out a plan to stay relevant at a time India, as part of its Nationally Determined Contribution (NDC) targets, has committed to achieving about 50 percent of its installed electricity capacity from non-fossil fuel sources by 2030. In an exclusive interview to Moneycontrol, Union minister for coal, mines and parliamentary affairs Pralhad Joshi revealed that the government has set a collective target of 12 GW of renewable energy capacity for all public sector undertakings (PSUs) under his ministry by 2030. He also talked about business diversification plans worth Rs 2,50,000 crore for Coal India and NLC India. Edited excerpts:
Coal production has risen significantly in the past two years but India’s power demand has seen a steeper spike. This summer the peak power demand is expected to touch 256 GW. Will the coal ministry’s production of over 1 billion tonnes be enough to meet the increased demand?
The 1-billion ton target will be achieved in this financial year (2023-24). For 2024-25, our updated target is 1,111.6 million tonnes. I believe this will be sufficient. However, at any point during the year, if we feel this is not sufficient, I assure you that we will increase our coal production further.
The issue is not about coal production, it is coal transportation which is the real challenge. But as far as coal production is concerned, even if the power demand reaches 256 GW, we are prepared to meet it.
Indeed, coal transportation has remained a constant issue. How long will it take for this to get streamlined?
I want to say on record that Union railway minister Ashwini Vaishnaw is handling it very effectively. The number of rakes for coal transportation has also been increased by at least 20 percent. But there continue to be some challenges, which we can't deny. It will take some time. Hopefully, in another year or two, the coal logistics issue will be resolved.
This is primarily a legacy coal logistics issue resulting from the earlier UPA government’s planning error. They set up thermal power plants at one end, while the coal mines were at the other end. So now, both the Ministry of Coal and the Ministry of Power are insisting those interested in opening thermal power plants to do so at pitheads. My ministry has asked Coal India and NLC India to do the same as much as possible.
Now coming to what we are actually doing to resolve the logistics issue. The Ministry of Coal is spending at least Rs 50,000 crore on railway projects to decongest coal transportation routes and on first-mile connectivity (FMC). To give you the break-up, we have undertaken 15 railway projects costing Rs. 26,000 crore to develop multimodal connectivity and identified missing infrastructure gaps for each project. Three of the 15 projects have been commissioned till date. Simultaneously, we are spending almost a similar amount on 67 FMC projects, of which nine have been commissioned so far. FMC means building mechanised coal transportation infrastructure from the mine to the siding yard or the coal handling plant.
Further, we have opened the rail-sea-rail route. We are also allowing coal transportation by road. The road-cum-rail mode is also available.
Has the Ministry of Railways also suggested your ministry to buy wagons?
No, nothing of that sort has been proposed by the railways to the coal ministry. But if the railway ministry suggests it, Coal India may consider it. But at present, there is no such plan.
You have talked about a viability gap funding (VGF) of Rs 6,000 crore for coal gasification. But interested private players say no formal announcement or notification has come yet. Where is it stuck?
Yes, it will soon be put up in the Union cabinet and once it is approved, the scheme will be formally launched.
Coal gasification is a new technology, considering that Indian coal has high ash content. So, people will invest with careful consideration. We are supporting this initiative to showcase a success story first. This will boost confidence.
Of the Rs 6,000 crore, half (Rs 3,000 crore) will be for PSUs and the other half will be for private players. Currently, five coal gasification projects by PSUs are in various phases of implementation. These include between CIL (Coal India Ltd) and IOCL (Indian Oil Corporation Ltd), GAIL and CIL, BHEL (Bharat Heavy Electricals) and CIL, and NLC India with BHEL.
As for the incentives, it has been decided to offer a 50 percent rebate in revenue share for the coal used for gasification provided the quantity used for gasification is at least 10 percent of the total coal production. Besides, CIL and SSCL (Singareni Collieries Company Ltd) have added a new subsector for auction of coal linkages to the non-regulated sector for coal gasification.
Last year you announced that the ministry aims to start exporting coal by FY26 and that imports of 107 million tonnes of substitutable coal will stop by FY25. Will that be achieved?
Due to the robust Indian economy, the requirement of coal for energy needs has suddenly increased. So, beginning coal exports under the current situation seems doubtful. Our first priority will always be to fulfil our domestic needs.
As for imports, again, it has grown out of the misdeeds of the earlier UPA government. India has at least 352 billion tonnes of coal reserves and yet they decided to set up imported coal-based power plants. No matter what, coal has to be imported to run these plants at least. Still, we are importing coal now at the cost of Rs 15,000 per tonne, which was earlier Rs 45,000 per tonne.
Could you elaborate on the business diversification plans of the PSUs under the coal ministry?
Coal India and NLC India have business diversification plans totalling Rs 2,500 billion (Rs 2.5 lakh crore) by 2030. India has committed to NDC targets to achieve for which even the Ministry of Coal has to do its part. We are going to invest in thermal power plants, but at the same time are also going to set up renewable energy capacity totalling 12 GW by 2030. This will include solar, wind, pumped storage and so on.
Look, significant electricity is required for mining. I have directed all coal PSUs to ensure that they meet their entire mining electricity requirement through renewable energy a few years down the line. In this, NLC India is already leading in powering their entire production through renewable energy.
Other things like afforestation, using mined water for irrigation and so on are ongoing.
Since renewables will have greater penetration over the years, does the coal ministry have a plan to reduce or pause coal production after 2030?
There is no question of any reduction in coal production after 2030. It will only increase. Power requirement in the country is going to double over the years, to say the least. Even if 50 percent of that is met by renewable energy sources, there is still going to be a huge need for thermal power. So, for the next 40 years at least, coal is going to stay (as a key energy source) in India.
There are plans of stake sale of up to 10 percent in NLC India. Is it confirmed?
The management and ownership of the PSUs under the coal ministry will always remain with the government of India. Any decision to sell up to a 10 percent stake in NLC India will be taken by the Ministry of Finance.
The ministry intends to increase the share of captive/commercial mines and then we also have the Mine Developer and Operator (MDO) mode. Over the years, will we see a change in the market where Coal India will not have a monopoly?
Coal India alone is producing around 780 to 800 million tonnes. Others—all put together—are producing only around 200 to 250 million tonnes. Even the big private players, they have a size of 15 million tonnes production a year only. So there is a huge gap. Coal India will remain the major player for another 20-30 years at least.
Is there a PLI-like scheme in the works to reduce imports of mining equipment?
As of now, we do not have any plan to offer PLI (production-linked incentive) for this. We are only telling our PSUs and even private players participating in our coal blocks and now critical mineral auctions to buy “Made in India” machinery even if it may be 5-10 percent higher in costs.
The ministry wants to increase its underground coal mining production from about 28 million tonnes to 100 million tonnes by 2030. It is expensive. Has a final decision been taken on the incentives?
Yes, it has been decided that for those entering underground mining through commercial coal mining, a 50 percent discount on revenue will be offered. Underground mining is less polluting compared to surface mining. In the future, we are even open to increasing the concession beyond 50 percent, if needed.
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