Coal news and updates

We need to understand the need for a coal regulator first: Anil Swarup

Union coal secretary Anil Swarup speaks with Sanjay Jog on changes in the sector and the way forward. Edited excerpts:

How far has coal availability improved?

Coal India in 2014-15 recorded an increase of 32 million tonnes (mt) in production. Over the base of that record output, we’re growing by nine per cent. So, we have inventory of 25 days in most power plants compared to five to seven days last year at this time. It happened because Coal India acquired 2,000 hectares, again a record, and got 41 environment clearances. This enabled it to expand existing mines and open new ones. In fact, it is opening a new one each month. We hope this trend will continue and further improve after the monsoon, and we’re able to hit the target of 550 mt set for this financial year.

Is CIL on track to achieve the production target of a billion tonne annually by 2020?

We are moving towards that. There is a full-fledged plan. A mine-wise plan has been worked out, entailing the land, environment clearance, human resources and technology that will be required. Each aspect has been worked out for each mine and the plan is on the portal.

Despite higher coal production, there has been less offtake...

The reason is a slight lack in demand from power utilities. Although demand has not grown so much, we are still short of the required coal. This is a temporary phase. The central government is very intensively discussing with state governments to improve the financial health of the distribution companies (discoms). The Prime Minister himself has taken a meeting. We had a meeting with the chief secretaries. Detailed plans have been worked out with the states.Once these happen, there will be increase in demand for power. There will be financial restructuring, detailed planning on how to reduce transmission losses, how to improve efficiency of power plants. We are very hopeful that the discoms will pick up and so will the demand for coal.

So far, (only) three states have joined the Centre to improve their distribution sector...

The engagement is with all the states. The problem is the discoms’ financial issues. They have not been able to raise the demand for power and so, there is lesser demand for coal. They have no money to buy power and that is why the central government is very intensively engaging with the states. I have been party to some of the discussions with the state chief secretaries and finance secretaries, to see how we could work with the states for improvement in the discoms’ health. This is not the outcome of the past six months or a year. The problem has been there for eight to 10 years. Resolving these might take some time but the commitment is there.

Has the Centre decided not to allocate new mines to the power sector?

No, we have still not decided. We still have blocks for the power sector. In three or four cases, some of the entities have gone to court. Some issues are being considered (there). Once resolved, we will come with the next round of coal. What we are also thinking is of handing over the blocks to be auctioned in the case of ultra mega power projects — people will bid for rates on the block’s availability. So we are looking at a variety of instruments to settle these problems.

When will e-auction of coal be introduced for the unregulated sector?

All the analysis of requirement and availability has been done. We have got feedback from the industry. The inter-ministerial committee has discussed and deliberated. We should now be able to come out with a clear policy within one and a half months on linkages to the unregulated sector. We are trying to put in position a transparent mechanism as was available for the other category of blocks. Earlier, these linkages were allocated through a standing committee and there could be chances of discretion, subjectivity, and could be questioned subsequently in a court of law, as had happened. So, we feel we should have a similar transparent mechanism to determine who should get these linkages.

Could you quantify the coal linkages to the unregulated sector through e-auction?

Since production is going up, we will earmark 25 per cent of it for the unregulated sector. Last year, the linkages we allocated were 55-60 mt. We’re going to increase this by almost 40 per cent; we will have another 25 mt or maybe more coming to this segment. This additional amount will certainly be auctioned, not allocated through the standing committee system. Still why has there been opposition to a shift to e-auction from the present linkage allotments through a standing committee? Those who already have these linkages are opposing it. Not any sector. If I have a privilege of having a linkage by some way or the other, why would I like to be deprived of it? In an auction, I have to bid. Obviously, people who are benefiting from the existing system are opposing it. I think it is fairer that everyone should get the opportunity to bid.

When will the coal regulator be put into place?

We have to first understand what value the regulator will bring to the system. We haven’t given a thought as yet, as we have been preoccupied with auctions and increasing production. Till we fully appreciate the nuances of having a regulator, we should not unnecessarily jump into it. We have to understand it very clearly, what value it will bring to the system and then decide.

source: http://www.business-standard.com