The sheen in the coal market in India is not going to fade despite the growing prominence of renewable energy sources but will remain intact in the future as the NITI Aayog has suggested a spectrum of initiatives in its recently released three year action plan for taking the coal industry forward in the country. The principal government think-tank asserted that coal will continue to remain as the predominant fuel for power generation in the country.
The ambitious target of reaching 1.5 BnT of coal production in India by FY20 is likely to be achieved without time overrun as the apex think-tank of the Government of India has suggested measures for speeding up coal production in the country.
The overall coal availability is suggested to be increased by engaging competent exploration companies by giving attractive contractual provisions to convert the 25% of the 139.15 BnT of coal reserves (as on 31Mar’16) from the ‘Indicated’ category to the ‘Proved’ category.
In addition to the state-run miner—Coal India Limited (CIL)—raising its coal production to 1 BnT by FY20, the NITI Aayog suggested the Singareni Collieries Company Limited (SCCL), under the Telangana government, to increase its production from 60.40 MnT to 80 MnT by FY20. However, the think tank has kept a room for deviating the targets, keeping in view the demand factor.
Efficiency in coal production is given substantial weight in the action plan. The labor productivity is suggested to be increased; alongwith raising the Output per Man Shift (OMS) in respect to the underground mines from 8% of the total coal production. Allowing commercial coal mining in the country is suggested in view of the specialized mining firms capable of efficiently mining coal.
The prolonged coal quality issue is being addressed by the NITI Aayog in the action plan. The quality of the coal extracted from the country’s mines is suggested to be improved by washing the coal before putting to use. To achieve this objective, the 15 proposed Coal Washeries are suggested to be set-up within the three-year time frame. The total number of Coal Washeries include: 6 Coking Coal Washeries with a cumulative capacity of 18.60 MnTPA; and 9 Non-Coking Coal Washeries with a total capacity of 94 MnTPA. As a matter of fact, coal washing increases the calorific value of coal by 10-20%.
Besides, reduction of using low quality coal, akin to the practice in China, is also suggested by the apex think-tank in its three year action plan.
CoalMint Comment:
“The Three Year Action Plan by the NITI Aayog nevertheless addresses the three critical parameters—increasing production, efficiency and quality—of the coal industry in the country. But, the pricing aspect, one of the most important parameters, is not at all mentioned in the plan. One of the major objectives of the GoI is to reduce coal imports and create demand for domestic coal; and when it comes to actual purchases, the buyers in the country are free to opt for imports if the prices in foreign markets are lower. Thus, to create demand for domestic coal there has to be a policy for aligning the prices of domestic coal with the prices in the key international regions.”
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