Coal news and updates

Coal India Ltd (CIL) has vast swaths of coal deposits, National Mineral Development Corporation (NMDC) has iron-ore mines yet to be tapped, states are keen to monetise natural resources, while Indian Railways is seeking new freight business. In a win-win situation, all have gotten together to put in place a number of joint ventures, meeting individual goals.

Tasked with executing Rs 10,000 crore worth of new railway lines in the remote parts of Chhattisgarh, Jharkhand and Odisha, Indian Railways will end up carrying an extra 200 million tonnes—a quantum jump of about 20% in the next four years or so. In the process, it would also help CIL reach its target of producing 1 billion tonnes of coal by 2020.

No less than five separate joint ventures have been set up, all with Ircon—a subsidiary of Indian Railways—as the project executing agency, giving it economies of scale, while making coordination by various joint venture parties with Indian Railways a single-window affair.

Chhattisgarh Eastern Railway Ltd—a joint venture between Chhattisgarh State Industrial Development Corporation (10%), South Eastern Coalfields Ltd (64%) and Indian Railways (10%)—will be a broad gauge electrified corridor from Kharsia in Chhattisgarh (part of South East Central Railway) to Dharamjaigarh and onwards to Korba, bypassing the Howrah-Nagpur mainline. In addition, a spur from Gharghoda to Dongamahua would connect the coal mines of the Gare Pelma block.

A project cost of Rs 2,323 crore was financially appraised by Care Kalypto Risk Technologies and Advisory Services, Mumbai, and Ircon was given the green signal to commence work. South Eastern Coalfields Ltd is a major subsidiary of CIL, which contributes 81% of overall coal production in India and this would further enhance its position as the premier coal production entity.

Chhattisgarh East West Railway Ltd—a joint venture between South Eastern Coalfields Ltd, Chhattisgarh State Industrial Development Corporation and Indian Railways—would provide an alternate route for evacuation of enhanced production from Gevra, Dipka and Kusmunda mines of South Eastern Coalfields Ltd via the Gevra-Pendra road, once again bypassing the overcrowded Howrah-Nagpur mainline.

Both Chhattisgarh Eastern Railway Ltd and Chhattisgarh East West Railway Ltd being designated as ‘special railway projects’ to provide national infrastructure for public purpose would expedite land acquisition under the Railways Act of 1989.

Jharkhand Central Railway Ltd—a joint venture between Jharkhand, Central Coalfields Ltd (a subsidiary of CIL) and Indian Railways, with equity as 10%, 64% and 26%, respectively—would connect Shivpur to Kathautia, a distance of 47.7 km, and a 44.5-km-long Shivpur to Tori section already being constructed by East Central Railway.

A 235-km-long Dalli-Rajhara via Rowghat new line for evacuation of iron-ore, though sanctioned in 1995-96 Rail Budget, picked up steam only in 2007 when an MoU was signed between NMDC, Govt of Chhattisgarh, Steel Authority of India Ltd and Indian Railways, with shareholding pattern of 43%, 10%, 21% and 26%, respectively—the execution being carried out by Ircon.

While work on the 95-km-long Dalli-Rajhara to Rowghat project is already under way, the second leg of 140-km-long Rowghat to Jagdalpur, costing about R640 crore, is yet to take off. With this project, NMDC’s annual production would double, serving private steel plants being set up by Essar, Tata, Jindal, Monnet, etc.

A joint venture between Industrial Development Corporation of Odisha, Mahanadi Coalfields Ltd and Indian Railways, with equity holding of 10%, 64% and 26%, respectively, is yet to have a detailed project report ready. Providing a 50-km-long Angul-Radhikapur line in phase-1 and a 54-km-long Radhikapur-Jharpada new line under phase-2, it would expedite evacuation of coal.

Given the difficult terrains in all these projects, Ircon has a daunting task ahead, though with states as a joint venture partner, land acquisition should not be a major problem. On completion, Indian Railways expects to carry about 200 million tonnes of additional coal and iron-ore, earning it roughly R20,000 crore annually—not a bad return for its investment of about Rs 2,600 crore.

SOurce: Financial Express