Coal news and updates

De-allocation of operational blocks not to hit output

September 26: Contrary to views expressed in many quarters, senior officials of Coal India Ltd (CIL) and a section of industry believes production from the already operational 40 captive blocks will not get affected at all in the coming months and end-use plants (EUPs) linked with those blocks will continue to get coal.

The operational blocks have been given time till March 2015 to facilitate transfer, post which the blocks may be given to CIL or a government company.

“Production from operational blocks will continue in the interest of linked end-use plants and thus the possibility of any decline in production from these is not anticipated,” the officials said.

As per the Supreme Court order, the existing owners will have to only pay Rs 295 per ton for coal to be mined and there is no reason whatsoever that they will not mine the coal.

“In any case, they would definitely want to take as much advantage as possible before the mines go out of their hands. But once the mines are taken over by CIL, there is a huge possibility of enhancement in production from most of the operating captive blocks,” the official believe.

Explaining the reason for the rise in production once CIL takes over the blocks, the official pointed out that at present there are restrictions on how much coal can be mined from a particular block and that is limited to the requirement of the end-use plant.

“But once the blocks are taken over by CIL, it can immediately apply for environmental clearance for 40% increase in capacity from the existing mines, wherever feasible,” they said.

“The additional coal mined could be supplied to other linked consumers,” they added.

The officials said Ministry of Environment and Forest (MoEF) norms already exist whereby CIL can apply for automatic environmental clearances for increasing production by 50% from mines of less than 5 mtpa capacity and by 25% from existing mines which have a capacity of more than 5 mtpa.

The official said though it is called automatic clearance, in reality it only gives exemption to CIL from holding public hearing to increase production from existing mines and that saves a lot of time generally spent on such exercises.

“However, in case of captive coal blocks, CIL will not face much problem in getting faster environmental clearances, because these mines already have forestry clearances,” the official added.

According to information available with ICMW, the government is believed to be working on a solution for EUPs related to captive blocks.

It is understood that while on one hand CIL will be in a position to increase production from the existing captive blocks, on the other, there may not be much problem to linked EUPs of captive blocks because the government will provide special linkages to them under which they would continue to get coal from CIL at the notified price.

“Automatic linkages may be provided to EUPs linked to captive blocks because the owners had spent a lot of money on developing the same. Though there may be slight increase in the cost of coal to the EUPs, they will eventually get coal and will not have to depend on imported coal,” a senior official said.