State run miner, Coal India Limited (CIL), has outlined a plan to commence operations at two of its opencast coal mines that were allocated via global tenders under the mine developer and operators (MDO) mode.
Under this scheme, the company has identified a total of fifteen (15) greenfield projects comprising eleven (11) opencast and four (4) underground coal mines that are to be operationalised by private participation. Cumulatively, these projects have production capacity close to 169 million tonnes (mnt) annually.
At present, tenders for seven (7) such projects were finalised and the letter of acceptance (LoA) has been issued to the successful bidders. Among this, Siarmal project of Mahanadi Coalfields Limited (MCL) in Odisha having 50 mnt of output capacity and Hura C of Eastern Coalfields Limited (ECL) in West Bengal of 3 mnt capacity are expected to start mining operations in the ongoing financial year.
MDO Contract Award
Source: CIL | Quantity in mnt per annum
Of the balance eight (8) projects, LoA for two opencast projects – Madannagar (12 mnt) and Pelma (15 mnt) – of SECL will be finalised soon. The remaining six (6) projects are at different stages of tendering.
Distribution of responsibility
The objective of engaging MDOs is to increase domestic coal output and reduce import dependency to an extent. However, the ownership of mines and the underlying coal rest with CIL.
In fact, the role of MDOs would be to excavate, extract and deliver coal to CIL subsidiaries in accordance to the approved mining plan. Thereupon, coal sales would be executed by the respective subsidiary.
The contract period of engagement is long-term, typically for 25 years or life of a mine, under which the private players would develop allied infrastructure at mines by bringing in technology infusion, bulk of the capex investment, economic viability and efficiency in operations.
Besides, the MDOs would facilitate rehabilitation and resettlement issues, land acquisitions, green clearances and coordination with various pollution boards for fast tracking the required approvals.
It may be noted here that to keep pace with rising demand, CIL has scaled up coal production, registering a robust growth of 17% to 412.6 mnt in April-November, 2022. The production target for FY23 is 700 mnt.
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