In FY 2022-23, the coal ministry not just exceeded its target of asset monetisation, but also surpassed its goal of coal production and despatch to the priority power sector. In an exclusive interview to Moneycontrol, Amrit Lal Meena, secretary at India’s ministry of coal, said there would not be any coal shortage in the power sector this year. He added that softening of global coal prices is likely to continue and that an increasing trend in coal imports has already started to show in power plants. Meena also explained how the issue of coal logistics chain is being tackled and said states can use the much-debated rail-ship-rail (RSR) only during the crunch period instead of the entire year. Edited excerpts:
According to the India Meteorological Department’s forecast, heatwave-like conditions are going to return and there are concerns over El Nino as well. Is the coal ministry prepared to feed the power sector as demand grows?
Our coal stock availability is quite comfortable today. We have about 33 million tonnes (MT) at thermal power plants, about 66 MT at Coal India Limited (CIL) and about 10 MT at different transit points. As of now, we have more than 115 MT of coal available in the country, which is sufficient to meet about two months of the country’s coal requirement. Production is also going on smoothly, so I do not foresee any shortage.
In FY 2022-23, CIL had a target of producing 700 MT and the actuals were 703.21 MT. In that, for the power sector, 556.26 MT was the target (for CIL), while the actual achievement was 586.9 MT.
What is your outlook on the current global coal prices and how do you see it impacting power tariffs and the government’s coal business?
Global coal prices compared to last year are low and because of this, there is a general comfort in the power sector this time. Now we are seeing an increasing trend wherein imported coal-based (ICB) power plants are importing more coal, as a result of which ample electricity is being generated. Last year the same plants were not importing as much because of higher prices, despite the mandates given by the power ministry. So to that extent, the load on domestic coal-based plants, which was much more last year, is being shared by ICB plants this year.
Overall, global prices of coal are much lower than last year during this time. Of course, it is not the same as pre-Covid levels, but overall there is correction which will continue.
Even as you ramp up coal production, logistical issues continue to affect supply to thermal power plants (TPPs). What has the government done to improve the situation?
The far-off states—Punjab, Haryana Rajasthan, Gujrat, Andhra Pradesh and Maharashtra—are the areas where logistic challenges result in delayed supply and depletion of stocks. To address this we are doing three things. First, adequate railway lines are being laid by the ministry of railways. Second, the states have been asked to lift coal under the rail-cum-road route (RCR). The third is the rail-ship-rail (RSR) route, which is currently being used by NTPC for their Jhajjar and Dadri TPPs. NTPC is lifting coal from the Paradip port through the RSR route. So we have three routes—all rail route (ARR), RCR and RSR. All three are now adequately taking care of the requirement.
But the RSR route is being opposed by many states as it is more expensive than ARR or RCR.
The point is that if states are getting reasonably adequate coal through ARR, nobody would like to go for additional cost. So, since the supply of coal through ARR in general is okay, states are able to maintain their requirement, which is why they are not very forthcoming to use the RSR route.
But, what we have suggested to the states is that for any eventuality, suppose the demand goes very high, we should have contracts in place to augment coal supply at the TPPs. This is expected to the extent of only 5-10 percent of the requirement, not all through the year. So, now we are saying that the RSR route can be opted for only in peak summers or peak monsoons, if railway transportation is disrupted. So they need to have this kind of arrangement only for the crunch periods. Now, some states have started considering RSR.
One has to understand that the RSR route is a substitute to imported coal and not domestic coal. The cost per tonne of imported coal is about Rs 10-12,000, for RSR route it is Rs 7,000, whereas for ARR it is about Rs 4,700 per ton.
When will the National Coal Logistics Policy formally be rolled out? How will it improve coal evacuation?
For the Coal Logistics Policy, (professional services company) Deloitte was hired by CIL. They have submitted the report. I have had a meeting with the stakeholders where we received some feedback, which is now being incorporated by Deloitte into their final report. The report is in its final stage.
Many of the projects proposed under the coal evacuation plan have been considered by the ministry of railways for augmentation of capacity and also for taking up new projects. So the National Coal Logistics Policy is being finalised but simultaneously, projects that have been identified as part of the energy corridor of the ministry of railways have also started.
We are funding many of these railway projects through CIL at a total cost of about Rs 15,000 crore in Jharkhand, Chhattisgarh, Maharashtra and Odisha. There are 13 such projects, of which three are commissioned while the rest are at different stages. All of them will come through by 2025.
Power is a priority sector, but what is being done to resolve coal supply issues in the non-regulated sector (industries)?
The indicator of the availability coal in the non-regulated sector is the amount of premium that is being offered over and above the notified prices for the power sector. Now we are seeing that the quantum of premium that is being offered in percentage terms is on a decline, meaning availability of coal for the non-regulated sector has also improved. But having said that, their total requirement is still rationed because we have to prioritise coal for the power sector.
The coal ministry is soon going to roll out a coal gasification programme. But what is being done to curb pollution at the mining stage?
For all our coal companies, coal mines, we have undertaken a massive planning to become net-zero by 2025. Our final calculation is that about 5,200 megawatts (MW) is the net-zero requirement for India’s (state-owned) coal mining sector. Accordingly, all our coal companies have made plans for setting up renewable plants to offset the carbon footprint from mining.
The government has rolled out seven tranches of commercial coal auctions so far, but many of them still haven’t find bidders. What is being done about this?
The reasons why coal mines are not getting bidders in repetitive rounds is because of factors such as the extent of habitation, forest cover, difficulty in acquiring land and connectivity issues. Also, if there are other geographical restrictions there and may be shifting of the existing assets, that also acts as a deterrent.
So what we have done this time is, first, for proper visibility for a potential bidder, we have established a Coal Block Information Portal on PM Gati Shakti national master plan, wherein for every call block, when you visualise it on the map, you are able to see as to what is the forest cover, what is the nature of the rail connectivity, road connectivity, telecommunication towers, transmission towers, and other land features. Everything is now visible. So that will help. Otherwise, the alternative was people going deep into that area to undertake surveys, which was difficult at times.
Secondly, we have undertaken an exercise to redraw such blocks to exclude these factors to make it more attractive. So hopefully now there will be less disruptions and better visibility. We hope that in the seventh round the response would be almost similar to that of the sixth round.
Coal minister Pralhad Joshi said India would export coal by 2025-26. Do you see this happening within the stated time frame?
Of course! Based on the grade of coal which is available in the country, we will be able to meet the nation’s requirement and have a little bit of surplus by 2025-26. The surplus can be exported if there are buyers. It will be difficult for me to state the likely quantum of coal that could be exported by the stated year.
The strategy will be opening new mines and, accordingly, ensuring all permissions, land and appointment of the MDOs (mining developers and operators) and so on. Another thing we will be doing is additional capacity enhancement for existing mines. Not just 2025-26, the coal ministry has clear plans till 2047.
But what is being done to improve the quality of coal?
One is the quality of coal available in the country, the other is manipulation in its reporting. As far as quality of coal is concerned, in different deposit areas, the quality varies. In certain places there are the G5, G6, G7, G8 categories of coal. In other places, G11, G12, G13, G14. In Mahanadi we have a little higher ash content. So it depends as to from which deposit the coal is being taken out. The problem that people talk about is of coal grade slippage, meaning, you are supplying coal claiming that it is G10, but when it goes to the user's end, it may turn out to be G12, so there is loss of energy.
To tackle the problem of grade slippage in coal, we have engaged third-party sampling agencies and every user is free to select any of these agencies. Every user has been asked to deploy extra people at the loading end so that the sampling happens in front of them. They have also been requested to keep digital evidence of the whole thing. As far as the ministry of coal and its subsidiaries are concerned, we want 100 percent assured quality supplied. But in transit, if there are manipulations, the user who is lifting the coal needs to take appropriate measures.
Globally, we are seeing coal projects increasingly not being favoured by banks for funding. Do you see that as a deterrent in India’s plans to expand commercial coal mining?
For global players, in terms of their participation in coal mining activities and especially technology transfers through their experience, this is getting affected because of non-availability of financial support from different global financial institutions. But as far as our (Indian) banks are concerned, they are financing to the coal mining sector. Captive operators are approaching them and they are getting financial support from Indian banks.
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