Coal news and updates

Significant achievements of the Ministry of Coal since the NDA government assumed office

1. Quality and Third Party Sampling - Recent decisions

To address the issues of dispute between coal companies and power utilities/developers and to bring about improvement in the quality of coal supply, the system of Third Party Sampling has been improved. Now, in addition to the Agency engaged by CIL a panel of reputed third party samplers has been jointly drawn up by a Committee consisting of     representatives from power utilities and CEA with the concurrence of CIL and notified     by CIL. Power utilities/developers shall select and appoint the third party sampler from this panel. However, for billing purposes, sampling and analysis shall be done at the     loading end by the agency. Payment for sampling shall be made by the power utilities/developers. 25 Third Party Agencies have been empanelled. The system has been     put in place at several loading points.

2. Rationalization of Coal Linkages

A new Inter-Ministerial Task Force (IMTF) was constituted on 13th June, 2014 to review the rationalization of linkages. The terms of reference included a comprehensive review of existing sources as also feasibility for rationalization of these sources with a view to     optimize transportation cost to consider all cases in Power, Cement, and Steel/Sponge Iron sectors where the consumers are already getting coal. The report of IMTF has been submitted in February, 2015 and its Stage-I recommendations are under implementation.

3. Automatic transfer of coal linkage/LoA granted to the old plants while scrapping and replacing them with new plants

The issue of formulation of a policy regarding automatic transfer of coal linkage in case of scrapping of old plants by replacing them with new plants has been under consideration for some time. The matter was placed before the SLC (LT) meeting held on     27.06.2014. The Committee decided that LoA / linkage granted to the old plant shall be automatically transferred to the new plant of nearest supercritical capacity. If the capacity     of the new supercritical plant is higher than the old plant, additional coal may be accorded priority subject to the availability of coal on best effort basis from CIL. At     least 50% of capacity of new supercritical plant has to be retired. This policy shall be     applicable to pre-NCDP plants in public sector only, which have already been granted     long term Linkages/ LoAs. Automatic transfer of LoA as explained above shall be permissible only when the new plant is set up within the State in which the old plant was     located and the old plant is actually scrapped. The old plant shall continue to operate till the CoD of new plant.

4. Policy for swapping of coal

In the recent past request have been received from Ministry of Power for allowing swapping of coal between State Utilities and Central Power Utilities for bridging the gap     between coal requirement and availability of domestic coal and to minimize the transportation cost and to avoid crises-cross movement in the over congested railways network. GSECL had represented that there was a possibility of reduction in transport     cost of coal. Gujarat is getting domestic coal from Korea-Rewa and plants of NTPC in     Chhattisgarh are importing coal through Gujarat ports. These coals could be swapped.     GSECL and NTPC had signed a MoU for swapping of coal.
  
The proposal of GSECL and NTPC has been agreed to. The domestic coal against FSA of     GSECL from Korea-Rewa has been allowed to be used by NTPC for their Sipat plant.     Destination change of domestic coal has been allowed, keeping all other terms constant,     subject to railway logistics. Arrangement with respect to imported coal may be on their     mutual terms, subject to decision in this regard by CEA/MoP. The system is in place and     working satisfactorily.

5. A. The Coal Mines (Special Provisions) Act, 2015

Hon’ble Supreme Court of India, vide judgment dated 25th August, 2014 and Order dated 24th September, 2014, had cancelled the allocation of 204 coal blocks on the grounds that the mechanism for allocation of Coal blocks was non-transparent and discretionary.
  
Within 27 days of the judgment, the Government promulgated the Coal Mines (Special Provision) Ordinance, 2014 on 21st October, 2014 and the Coal Mines (Special Provisions) Second Ordinance on 26th December, 2014 (now substituted by an Act of 2015) to provide for re-allocation of 204 coal mines and vesting of the right, title and interest in and over the land and mine infrastructure together with mining leases to successful bidders and allotters with a view to ensure continuity in coal miningoperations and production of coal. The Coal Mines (Special Provisions) Rules, 2014 were also notified within 50 days on 11th December, 2014. The allocation of cancelled coal blocks have been made in pursuance of the provisions of Ordinance and Rules made thereunder. To replace the Ordinance theCoal Mines (Special Provisions) Bill 2015 was passed by both the Houses of     Parliament and received the assent of the Hon’ble President of India on 30.03.2015.

The Salient Features of the Act are as follows:-

    204 cancelled blocks defined as ‘Schedule-I coal mines’.
    42 producing and ready to produce coal mine out of Schedule-I coal mines defined as ‘Schedule-II coal mines’.
    Other 32 substantially developed coal blocks out of Schedule-I coal mines defined as ‘Schedule-III coal mines’ meant for specified end-use (more mines could be added to Schedule-III).
    Allocation made through auction to a company or their JV.
    In case of Government Company or their JV, allotment without auction.
    The proceeds of auction to be disbursed to respective States.

B. Coal block auction and allotment under the Coal Mines (Special Provisions) Act, 2015
  
In order to allocate coal mines under the provisions of the Act:-

    Nominated Authority’ was appointed.
    A transparent process of auction was evolved using IT applications and engagement of expert external agencies viz. MSTC and SBI Capital Markets Ltd.

Accrual from auctioned blocks:-

    The total estimated amount of revenue likely to be raised over the leased period in respect of 29 coal mines already auctioned is Rs. 1,71,962 crore.
    Apart from this, royalty of Rs. 20,621 crore, upfront payment of Rs. 932 crore accrues to the States.
    The auction proceeds to be transferred to the respective State Governments. Eastern states would be the biggest beneficiary and would financially empower them.
    Rs. 69,310 Crore by way of tariff concession to the consumers of power from the 12 blocks auctioned for Power Sector.

Accrual from allotted blocks:-

    Notice inviting application for allotment of 43 coal mines to Government companies issued on 18.02.2015. Allotment of 38 mines done on 23.03.15.
    Rs. 65,573 Crore as revenue to States from allotted blocks.
    Rs. 76,281 Crore as royalty to States from allotted blocks.
    Overall value creation of Rs. 4.04 lakh crore from 67 coal blocks auctioned and allotted so far.

6. Coal production:

    1 Billion Tonnes production program of CIL by 2019-20 has been finalised.

7. Status of Coal Supply

    During 2014-15, coal dispatch to the power sector from CIL/SCCL sources grew by 9%.
    During 2014-15, coal materialization to the power sector from CIL/SCCL sources has been 87.6%.
    For the period April, 2014 to February, 2015, coal based power plants have generated 732.5 Billion Units (BU) as compared to 648.3 BU generated during the same period of last year, registering a growth of 13%.
    Coal consumption grew by 8.9%
    There has been 7.5% growth in indigenous coal receipts.
    Coal stock of Power plants is monitored by CEA for 100 major Power plants. As on 31st March’15, these 100 Power plants had 26.10 MT coal stock, sufficient for 18 days coal requirement. As on 31st March, out of these 100 monitored plants, there were12 Power plants with critical coal stock (with less than 7 days coal requirement) out of which only 6weresupercritical (stock with less than 4 days consumption).
    8. Coal Project Monitoring Portal (CPMP)

Launching and managing Coal Project Monitoring Portal (CPMP) to resolve issues of coal companies pending at State Govt. as well as Central     Ministries. The portal has now been open to the recent allottees of Coal Blocks.

9. Environment and Forest Clearance:
  
38 projects of Coal India with an incremental capacity of 107.36 Million tonnes were granted Environment Clearance by MoEF & CC with regular follow     up and meeting. 7 projects of Coal India with an area of 887.455 Ha were granted Stage I forest clearance and 4 projects of Coal India with an area of 123.524 Ha were granted Stage II forest clearance.

10. Progress in Railway projects:
  
Based on the existing SPV operating in Chhattisgarh, draft MOU has been finalized for the railway projects in Odisha and Jharkhand involving stake holders like Ministry of Coal, Ministry of Railways and State Govt. The proposed SPV will take up railway projects in respective states.

11. PPP in coal PSUs

A Committee was set up under the chairmanship of Secretary (Coal) in March, 2013, with representatives from Planning Commission, Ministry of Finance     (DEA), Ministry of Labour and Employment and Ministry of Law & Justice     (DLA) to consider Public Private Participation (PPP) with Coal India Ltd. as one     of the partners for augmentation of coal production in the country.  

A Model Concession Agreement (MCA) for engagement of MDO in CIL has     been finalized and the same has been sent to CIL for its adoption by their Board.

The Board of CIL has, with certain modification, adopted the Model Contract     Agreement for mining of coal in the various mines of CIL.

12. Disinvestment of CIL

To comply with the SEBI guidelines of minimum public shareholding for listed companies, 10% out of 89.65% of Government of India Shareholding has been disinvested though offer for sale (OFS) method on 30.01.2015.

source: http://www.thehansindia.com