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Companies must justify coal demand, says coal and power minister Piyush Goyal

Coal and power minister Piyush Goyal on Monday said that number of coal mines to be allocated through the next auction to any public sector or private company will be based on a scientific assessment of actual needs of power plants or steel units that are being set up.

Goyal told reporters that a committee will carefully study production plans of units that will be end users of coal and then decide the quantity that will be required to run them or steel making units over their lifespan.

Each company will have to justify its demand for coal mines based on the number of plants it is setting up.

Goyal also said that state power utilities will be allocated mines that are close to plants that are being set up.

The rationalisation of coal linkages is an important part of the government's policy to make the power and coal mining sectors more efficient.

Goyal pointed out that "it was silly" to transport coal in the railway network in two opposite directions because mines were not allocated to power plants set up in their vicinity.

He cited the example of how within a few days after coming to power the government had cleared the Gujarat electricity board proposal to swap its coal from domestic mines with NTPC's imported coal.

The proposal had been pending for several years with power plants in coastal Gujarat bringing in coal from the hinterland while NTPC was transporting coal from the Gujarat ports in the reverse direction.

Goyal said that his plan to double the output of Coal India Limited to 1 billion tonnes in the next five years is based on a welldevised strategy that would entail quickly bringing more mines into production as work had still not started in as many as 200 blocks.

Clearances will be expedited so that new mines come into production from which he expects an additional 200 million tonnes (MT) of coal.

Another 200 MT of coal is held up in mines because there is no railway infrastructure to carry it. With three new railway lines being laid, this output would become available, Goyal added.

The minister pointed out that Suresh Prabhu has been appointed as the rail minister to expedite these projects and streamline the network as he has already served as the chairman of the advisory group for the integrated development of the power, coal and renewable energy sectors with the goal to ensure 24x7 electricity supply.

Prabhu has got a deep insight into the transport bottleneck holding back the coal and power sectors and is the right person to speed up plans for streamlining the system, Goyal added.

The minister also disclosed bigger plans for NTPC. He wants to transform the public sector power major into an end-to-end company that will produce enough coal to meet its own demand and also power distribution.

Source: Business Today