The blame game on coal shortage

The serious shortage of domestic coal supplies, becoming graver by the day, is being directly attributed to the ministry of environment and forests's (MoEF) green activism; particularly that of its minister. The standoff between the ministry of coal and MoEF is only partially resolved, but this time the minister has hit the nail on the head. At the last Group of Ministers meeting, the minister pointed out that Coal India Ltd (CIL) wants to bring in more and more new areas under mining without fully exhausting the production potential of existing areas.

Is CIL left with any other option?

It is now clear that CIL has reached a stage where it is unable to further increase coal production either from the existing mines or by starting new mines. CIL had already stretched its capacity to limits when in December 2005, Public Investment Board (PIB), under the chairmanship of then-expenditure secretary, cleared 16 proposals in one shot for enhancing the capacities of several large opencast mines by an additional 100 million tonnes (mt) of annual coal production (read government approval for over-exploitation of existing mines). CIL's total annual production in the year 2004-05 was only 323 mt, which, thus, grew to 431 mt in 2009-10-an increase of over 100 mt in 5 years. Then, CIL registered zero growth next year in 2010-11.

CIL is also unable to quickly projectise virgin coal blocks, not only because of the recent go/no-go controversy but also because of the skewed government policy of the past. CIL had reported that it can produce 500 mt annually starting 2011-12 until 2036-37 if it was allowed to retain 289 virgin coal blocks (known as CIL blocks) out of the total kitty of 499 virgin coal blocks for meeting its long-term requirement. These 289 virgin coal blocks were better explored, had largely proven reserves with developed infrastructure viz rail, road, power, etc, compared to the blocks being offered for captive mining (174 in number) to private parties and others, which were largely unexplored or were away from developed infrastructure. But this was not to be. The Prime Minister's Office (PMO) supported the recommendation of the Ratan Tata-headed Investment Commission (2006), which recommended that 'CIL blocks' should be de-reserved. Since CIL was planning to projectise only 150 blocks until 2011-12, the balance 79 fully explored virgin CIL blocks were de-reserved, thus seriously limiting CIL's capacity to manoeuvre against the go/no-go embargo in 2010. Now, many of the CIL's virgin blocks to be projectised by 2011-12 got stuck with the go/no-go controversy as many of these blocks lie deep in unbroken forests in newer coalfields or in existing coalfields with already high levels of pollution. Understandably, CIL now desperately needs all these shallow virgin coal blocks to be cleared for opening new mines as it is hardly left with any other option.

In spite of many constraints, out of 40 blocks allotted prior to 2003, 14 blocks (out of 26 today) were operating in 2009 and more were ready to follow. On the other hand, the de-reserved good CIL coal blocks allotted to private parties or governments for fast tracking coal production have failed to produce any coal so far.

In the long-term, CIL's production is going to decline very sharply as the older mines get depleted faster due to over-exploitation and it would not have any virgin coal blocks to projectise after finishing the current lot due to the release of 'CIL blocks' to private parties and others.

The problem of shortage of coal to the power sector had become so acute that the PMO intervened and got some of the blocks cleared that were initially under no-go, including one coalfield in Orissa, which was high on Comprehensive Environmental Pollution Index.

The pressure from the ministry of power has also been increasing because many of the existing power plants are forced to back down due to a shortage of coal, and there is a clear possibility that the shortage will result in the stranded capacity of almost 24,000 MW of the current Plan period's likely capacity addition of 55,000 MW; lowered down from the ambitious plan of 78,000 MW to start with.

It is obvious that CIL, a maharatna company, is left with no contingency plan to fall back upon and, therefore, it is now coercing the government to clear all the leftover virgin coal blocks; be it a case of diversion of deep forest land or be it a case of ignoring the high degree of pollution in the coalfields. Now the Prime Minister himself has decided to intervene by scheduling a high power meeting of concerned ministers and the deputy chairman of Planning Commission.

It is going to be a tough call but the outcome of the meeting is a foregone conclusion.

Tags: power plants, coalfields, coal shortage, coal production, Coal India Ltd