Coal news and updates

Which sector should get priority in coal allocation

It is likely that, in ten days, to facilitate smooth running of the e-auction process, government may finalise the allocation priorities, to power sector, followed by steel, cement etc.

An inter-ministerial committee met on Tuesday to discuss the methodology to arrive at floor and reserve price for e-auction and the allocation of coal blocks, in line with the Supreme Court directive. It is likely that, over next 10 days, to facilitate smooth running of the e-auction process, government may finalise the allocation priorities, to power sector, followed by steel and cement. This process may be announced by 24th November.

As a first step, the Ministry of Coal will consider allocation of 42 coal blocks, which are already producing for both Central and State government undertakings; the balance 32 blocks which are almost ready will also come under the hammer and which would need new developers. Apart from various Secretaries involved in the Ministries,

representatives from Coal India Ltd (CIL) and Central Mine Planning and Design Institute will also form part of the Committee.

According to the press reports, Coal Secretary, Anil Swarup is reported to have stated that out of the 74 blocks, as many as 20 may be set aside or be reserved for allocation to state and government public sector undertakings. And these 20 blocks are currently said to be belonging to state government-owned companies. The balance 130 blocks (204-74) have had no activity so far and it is likely that they may not have made any attempt to complete the required formalities or got stuck at various points as non-starters.
 
Anil Swarup has further clarified that the government has no intention of making these blocks available, on gratis basis, even to state or central PSUs and they will also have to meet the reserve price based on valuation of property and the price of imported coal!

In the meantime, it may be recalled, that the Supreme Court had made the exemption in case of 12 blocks allotted to UMPPs and one each to NTPC and SAIL. So far, a great number of bidders are keen to participate to take the MDO (mine developer & operator), when NTPC calls for a bid to operate the Pakri-Barwadih captive coal block, said to have an estimated reserve of 504 million tonnes.

NTPC are the largest coal consumers in India, requiring an average 170 mt per year to operate their power generating plants. When the Pakri-Barwadih block is fully operational, it will reduce the supply bottleneck that they have faced on a regular basis.

Full details of the tender may be announced shortly.

Swarup is reported to have candidly said that while coal was available within the country, the problem actually relates to the evacuation of coal from pitheads. To overcome this issue, three railway lines are in process, one each in Odisha, Jharkhand and Chhattisgarh; these will be ready by 2019, and the earliest one to operate is likely to be the Odisha line that may be functional by 2017. The second issue covers the inadequate supply of rakes, which are currently about 200, and they expect to add 250 more in the next few years so that the coal movement becomes easier.

Railway tracks in our country are not extensively used in the night and optimum utilisation during the night for coal movement should be investigated as an alternative. Consumers should be encouraged to "opt and buy" their own rakes and make them available to Railways for transporting coal, if needed.

Source: Moneylife