Coal news and updates

Railways to tap stakeholders for coal pithead connectivity

Coal India’s output for FY14 was 462 mt and it accounts for 80% of India’s total production of the fuel.

Indian Railways, which gets about a third of its overall revenue from coal transportation, has fast-tracked its plan to build rail connectivity to coal-bearing areas in central and eastern India by involving stakeholders like Coal India and NTPC as part-investors. These rail lines — entailing a collective investment to the tune of R10,000 crore — can potentially boost India’s coal output by a massive 300 million tonnes, given that transportation bottlenecks hamper development of potentially rich coal mines in these areas.

While the new rails to pitheads will be built in Jharkhand, Chhattisgarh and Odisha, NTPC will be extending some of these lines to its upcoming power stations along the east coast.

Coal India’s output for FY14 was 462 mt and it accounts for 80% of India’s total production of the fuel.

According to official sources, what has lent momentum to the plan now is the Narendra Modi government assuming office. The national transporter, the sources said, has prepared a blueprint for the rail projects, including the financing options.

To put all these projects on the fast track, the Railway Board has mooted the idea of a high-level infrastructure committee that would look into the pithead and port connectivity projects. “Once the new minister takes charge, we’ll put forth this idea for final clearance. For us, coal is the priority sector as it gives us earnings to the tune of R45,000 crore annually. There’s no doubt that the new government would give top priority to coal-connectivity projects as it would be beneficial for the power sector and would slow the growth in coal imports,” a Railway Board official said.

Coal India has long argued that it may have to settle for an annual output growth of just 30 million tonnes over the next few years if rail connectivity to pitheads is not improved. Many potentially rich coal mines remain underutilised for lack of connectivity.

Given its unhealthy operating ratio of 90%, the railways has limited ability to increase its capital spend and, hence, the innovative method of customer-funded lines to give better connectivity to industry. Almost 60% of the proposed connectivity projects will be funded by Coal India and NTPC.

Railways subsidiary Ircon International, the Chhattisgarh government and South Eastern Coalfields have recently formed a joint venture to develop two rail corridors at a cost of about R4,000 crore. Corridor-I or the the East Corridor will be about 180 km from Bhupdevpur-Gharghoda-Dharamjaigarh up to Korba. Corridor-II or the East-West Corridor from Gevra Road to Pendra Road through Dipka, Katghora, Sindurgarh and Pasan runs 122 km. Some of these projects include double-lining so that coal doesn’t get piled up at pitheads.

“The coal stock at the pithead has come down from 75 million tonnes to 57 million tonnes and it will be further go down once the projects start getting operational by 2016,” the Railway Board official added.

Source: The Financial Express