India to Increase Coal Production; Doubles Targets for State-run Miner

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Researched by Industrial Info Resources India (Delhi, India)--In a bid to mitigate the acute coal crisis in the country, the government of India has set an ambitious production target for the state-run coal miner Coal India Limited (CIL) (BSE: 533278) (Kolkata).

In a first-ever exercise, government has drawn a mine-wise plan for the company to achieve a 1-billion-tonne (BT) production target by 2019. An annual production target of 925 million tonnes (MT) has been set for the company, against the current target of 428 MT, although CIL has fallen short of its production goals on many occasions in the past few years.

It is estimated that the domestic coal demand would increase to 1.2 billion tonnes by 2019-2020. Besides ramping up production of CIL, the government is also trying to fast-track the bidding for 204 captive blocks, which were de-allocated by the country's Supreme Court.

Among the 204 captive coal blocks, re-allocation of the first lot of 74 is due to be completed by March 2015. According to Coal Ministry sources, most of these blocks among the 74 blocks will be made available to the companies with end-use plants like power, steel and cement, through an e-auction process that will commence on February 11, while the remaining blocks will be allotted to the central and state-run companies without auction.

The apex court had termed the allocation of 204 mines since 1993 as arbitrary and illegal. Besides 42 blocks, which are already producing 90 million tonnes of coal, and 32 blocks, which have a capacity of 130 million tonnes, and have most of the clearances in place, the government would auction or allot 18 more blocks. This would add another 100 MT of production.

"The methodology for bidding would be put up for Cabinet approval," said Coal Secretary Anil Swarup. He also stated that the ministry would create a platform for monitoring clearances for all projects.

Together, the 92 blocks are expected to produce 310 MT. Some 57 of these blocks would be reserved for the power sector, of which 34 would be allocated to the government-owned companies.

"These (coal blocks) will be primarily for power sector because when we analysed the number of coal blocks to be put for auction, we discovered that sufficient number of coal blocks were not available for power sector," Swarup said.

The ministry has already come out with draft rules under a coal ordinance. It has also tabled a bill in Parliament for changes in the Coal Mining Nationalization Act and Mines and Mineral Development & Regulation Act.

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