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JSPL lauds coal auction to pvt cos

Private power players have demonstrated in the past that they are much more efficient and more successful in meeting deadlines; so allowing them to participate in the coal auction is definitely a positive step, Ravi Uppal, MD, JSPL said. “Coal block allocation will aid in improving efficiencies and entry of private sector will boost overall coal production in India,” he told CNBC-TV18 in an interview. For the first time ever, Cabinet approved auction of coal blocks on Tuesday to private companies, enabling the government to allot coal mining licences through competitive bidding. However, starting physical production of coal from mines remains one of the biggest challenges and high land acquisition cost could be the second stumbling block, cautioned Uppal. Further, he added that the government should provide more clarity on surface mining rights and land allocation process. India’s power sector has been hit hard due to acute shortage of coal as the county relies on coal to generate more than half of its power. State-run Coal India accounts for around 80 percent of India’s output and has not been able to meet the demand of the power sector.

Below is the edited transcript of Ravi Uppal’s interview with CNBC-TV18 Q: What is your view on this auctioning process and what has come through from the Cabinet Committee on Economic Affairs CCEA? A: It is certainly a positive step forward. Entry of private sector into coal mining by acquiring coal blocks will definitely add to the efficiency of the sector. It is no secret and the private sector has demonstrated in the past that they move with a much more speed. They can achieve more efficiency when it comes to mining activity. They have demonstrated much higher success in meeting deadline. This would definitely boost the production of coal which is the prime need of the country. We have been living in a regime where we are saying how to manage short risk. From that we have to migrate to a situation where we should create surplus coal, so coal becomes a non issue. Q: Can we run away with that kind of optimism. The policy has been announced that coal blocks will be auctioned not allocated do you see this taking a long time to come to fruition because of land acquisition issues as well? How much time normally after the coal block is allocated will it take for you to actually get the coal usually? A: That is the bigger challenge. Now they are saying six blocks will be auctioned containing about 2 billion tonne of coal and some of them maybe year marked for the power sector. They are going to get environmental and forest approval before they go for auction. It may not be a formal approval per se, but they will certainly seek principle consent from the Ministry of Environment. That has been one of the biggest challenges when comes to starting physical production of coal from mines. The second question is about land. There are two options there. One should acquire land outright or one can acquire surface mining rights. Surface mining rights might make the process easier. The government has to get into nitty-gritty as to how surface mining rights should be given or how outright acquisition land will happen. Yes land acquisition could be the second stumbling block.

Source: Moneycontrol