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Speed up private entry in coal mining, CIL rejig: Economic Survey

The government needs to fast track entry of the private sector in commercial coal mining and restructure state-run Coal IndiaBSE 1.87 % to augment production and reduce imports of the dry fuel that cost Rs 95,175 crore in FY'2014, the pre-Budget Economic Survey today said.

R"The gap between demand and supply has consistently been increasing...To fill the gap between domestic demand and supply, the country imported about 146 MT (million tonnes) at a cost of Rs 92,538 crore during 2012-13 and about 169 MT at a cost of Rs 95,175 crore during 2013-14 (provisional)," said the Survey for 2013-14 tabled in Parliament by Finance Minister Arun Jaitley.

Based on the sectoral analysis carried out by various committees and institutions in the recent past, "the demand and supply projections of coal sector, and the current status of the coal mining, ...initiatives need to be expedited on priority basis," the document said.

The initiatives, include accelerating the coal production in the short term by building critical feeder route for coal, clearing pending environment and forest clearances, permitting commercial coal mining by the private sector and restructuring state-owned Coal India. CILBSE 1.87 % accounts for over 80 per cent of the domestic coal production.

"A bill to amend the Coal Mines (Nationalisation) has been pending in the Rajya Sabha since 2000 and its passage needs to be expedited to permit private-sector entry into coal mining," it said.

The TL Shankar Committee on Road Map for Coal Sector Reforms had recommended restructuring of Coal India during the Twelfth Plan. "The process needs to be pushed through swiftly," the Survey said.

"The implementation of key infrastructure projects for evacuation and movement of coal will be of critical importance for enabling a step up in coal production," it said.


"In order to transport coal from the pithead, three critical rail lines have been identified which include Tori-Shivpur-Kathutia (90.7 Km) in North Karanpura in Jharkhand, Jharsuguda-Barpalli-Sardega (53 km) in Ib Valley, Odisha and Bhudevpur-Korichapar-Dharmjaigarh (180 km) in the Mand-Raigarh coalfields in Chhattisgarh. Work on these critical routes need to be expedited," it added.

The Survey further said that with stagnant domestic production, coal imports are likely to surge in the remaining three years of the Twelfth plan ((2012-17).

In terms of value, coal remains are the third largest imported item after petroleum, oil and lubricants (POL) and gold. Its rising trend will keep putting pressure on India's current account balance, it added.

RThe report of the Working Group of Coal and Lignite for the Twelfth Five Year Plan projected the coal demand in India to grow at a CAGR (Compound Annual Growth Rate) of 7.1 per cent till 2016-17 and reach 980.5 MT annually under "realistic" demand.

With a projected growth rate of 7.0 per cent, demand is expected to reach 1373 MT by 2021-22, the Survey said.

Sharp deceleration in production of natural gas in the past two to three years has further increased the energy sector's dependence on coal.

The main end-use sectors of coal are thermal power plants (60 per cent), iron and steel (7 per cent) and cement (5 per cent), apart from the irregular demand from the unorganised small-scale sector comprising primarily the brick and ceramics industry.

The performance of coal sector in the first two years of the current plan period has been subdued with domestic production at 556 MT in 2012-13 and 566 MT in 2013-14.

Overall domestic demand for coal during these two years was in the range of 715-720 MT, it said.

Source: PTI