Post re-allocation of cancelled coal blocks pursuant to the Supreme Court’s judgment in 2014, production from captive coal blocks has been rising steadily. But the volumes yielded have not managed to contain the bulging imports bill.
With the gradual re-opening of coal blocks, captive production attained a new high of 61.5 million tonnes (mn t) in FY ’21, up 6% year-on-year (y-o-y) compared with 57.87 mn t in FY ’20, as per data provided by the Ministry of Coal.
However, there has not been a significant improvement in the share of captive output. Notably, production from captive blocks accounted for a mere 9% in the country’s overall coal production of 716.01 mn t during FY ’21.
The coal ministry’s report indicates that the Trans Damodar coal block of Durgapur Project Ltd (DPL) has restarted production in the current fiscal of FY ’22, which takes the present number of operational blocks to 28. However, these remain comparatively lower than the 37 blocks which were earlier in operation, post-cancellation.
Reasons for shortfall
The initial round of auctions for sale of coal blocks were successful as these attracted many private players and miners who showed interest and participated with the mind-set of securing coal supplies for their end-use plants.
However, response started dwindling drastically during the subsequent tranches of auctions because the previous successful bidders had quoted extremely high prices to bag these blocks. But, later, during the subsequent auction tranches, they realised their inability to to recover the costs and that it would be unviable to bid for the coal blocks again.
It is pertinent to note that successive auctions held between the fourth to seventh tranches had to be cancelled/annulled owing to non-receipt of the requisite minimum number of bids. In fact, the bid received in the eighth tranche was the first allotment seen after a gap of four years.
Moreover, delays regarding land acquisition and sanction of other statutory clearances have proved to be additional hurdles before these captive miners for starting production. Out of the 37 auctioned blocks, the vesting order of eight has been cancelled by the government due to different reasons.
Top five captive miners
List of major coal producers who mainly comprise of power utilities . Amongst these, Sasan Power had registered the highest output during FY ’21.
Besides, West Bengal Power Development Corporation (WBPDCL) and NTPC have aggressively made efforts to operationalise their allocated blocks in order to meet their captive coal requirements. However, no such effort was noticed from the non-power sector.
Recent developments
In order to enhance productivity of the coal blocks, the government, through an amendment in the MMDR Act, has allowed the captive miners to sell up to 50% of their annual coal production.
Also, in order to enhance domestic coal production and curtail costlier imports commercial coal mining has been introduced with new reforms.
In the first round of the auctions, 20 out of the 38 offered coal blocks had been secured by the bidders. However, any substantial increase in total coal production immediately is not possible given the fact that the start-up of new mines would require anywhere between 5-8 years for obtaining various clearances and approvals.
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