Sometimes we need to write to listen to ourselves. The achievements and fallacies equally need introspection – for the first is to review the outcome and the latter is to make improvement and get the desired outcome. Something in line with the above ponders me with deep thoughts for the Indian Coal sector. I am reflecting here the choice between growths and self-sustaining.
There has been a quite hue and cry across Globe regarding the usage of coal as primary fuel post COP21 Paris Summit. The pressure from developed Nations to reduce the usage of coal has put a bottleneck for the developing nation. However what can be seen as a lack of prudent due-diligence is how the Nations which are developed today went through their developing period!
Leading Energy Analyst Bodies estimates that a third of Global Energy Demand will come from India. With Urbanization going on rapid pace and as more work forces join in cities, India Electricity demand powered by Infrastructural growth will influence more usage of Coal. The Key Macro Indicators gives us a startling figure. India accounts for 2.40% of World Surface Area but it will support around 17% of World’s population. It is also notable that no country has achieved a Human Developmental Index (HDI) of 0.9 without an annual energy requirement of 4 toe per capita. Presently India’s HDI is 0.589 and to push the number up, massive efforts and investments are required in Infrastructure work; this will further maximize the requirement of Electricity. To put thrust to the above the present Government have launched many fast track innovative schemes like AMRUT, SAGARMAL Project, Smart City Mission, DDUGYJ amongst few others. Therefore a Challenging task is to Fuel the growth.
ENERGY MIX SCENARIO
The present Energy Mix scenario (as reflected in the chart aside) puts us into various debatable discussions. The primary question of which is how much the share in Sector should go up or down. However, as our Democratic Nations struggles, debates, battles it provides us with an Epic Panorama of Possibilities. As an industry insider, my personal practical assumptions based on current trends, Government Policies hinges my mind more towards Coal. The reason the same can be captured by another interesting analysis as reflected in a report from IESS 2017. They emphasized the Importance to understand the Activity Demand as below.
Furthermore the flow diagram below correlates the usage Transformation fuel, i.e products from Coal and other Natural fuel blends. The future also forays that demand and technology need will increase for projects like Coal to Liquid by blends of other resources and India having 8% of its total coal resources at a depth of > 600mts gives us an immense challenge as well as potential use Transformation products.
The activities show a clear indication how much and by what means we need to trend to cater to the huge upsurge in Energy demand.
Revamping Coal& Solutions thereof Considering the above narrations and analysis, it throws a clear picture that Coal will be ‘Most Determined’ factor in the Energy Mix. Although, Post De-allocation of Coal Blocks vide Judgement by Hon’ble Supreme Court of India in Sep’14, Coal India Limited has been taking all necessary measures to cater the domestic requirement; however few immediate measures on Fast Track are necessary and listed below:
i) Re-Starting Captive Mining:
a) This should be the most focussed issue. Even after 3 years of Coal Blocks auctions a meagre 8 odd Blocks are Operating out of 84 Auctioned/allotted mines. It may be noted that Super Thermal Power Plants, where Private Players have huge investments are running in abysmally low PLF. For IPPs which need daily 50,000+ Tonnes of Coal daily, it is practically a daunting task to feed that quantum of coal by road & rail from far off mines to Plant considering logistics/ Environmental and operational constraints. This also leads high operational cost.
b) Bidder Requirement: Considering the termination of 4th& 5th Tranche of Auctions due to paucity of Bidders, auction must be conducted for even 2 Bidders which is presently been notified by Ministry of Mines – Coal Block Auction should also follow the same.
c) Clearances: Blocks which are auctioned / going to be auctioned should be brought under on Umbrella to give clearance at all levels to commence mining. The Greens nod hurdles, land acquisition hindrance must not be the bottleneck.
ii) Developing Deep Seated Coal:To Improve the Energy Mix, it is equally imperative to increase the share of Gas. Thus fast track coal block auction and development should be undertaken for Under Ground Coal Gasification.
iii) Coal India’s Duty: Till Government Streamlines Coal Block Auctions and fast track their Operations, CIL must try to cater both the Regulated and Non- Regulated Sector by bringing more Special Forward and Exclusive Auction across all of its subsidiaries so that both the referred sector gets seamless Coal Price at cheaper price.
iv) Offered Block Analysis: Ministry of Coal must analyse the number of Blocks auctions and will be put up for Auction including Commercial Mining; whether entire Coal including CIL Coal will be consumed when all the Blocks are commissioned.
v) Reduction of Royalty Rates: It is very prerogative to reduce the overall Rate Structure of Coal which presently highest in India; Coal Taxes constitutes nearly 80% of Base Price of Coal.
For all of the above plans and actions and to bring comfort to the hypothesis we cannot hurry neither we can wait. Yes, there will be several bottlenecks but our potential lies in the huge unexplored reserves. The constraints are not of economics, but of capital requirement. Our Policy makers need to make smoothen FDI inflow and other remedies to pump sufficient capital in the Mining sector. It is now time to take a Steady step, with care, imagination and with a sense of vision. It is time that Government must outline the possibilities for the nation not only for themselves but for a tired and patient India.
By: Mr. Tanmoy Chakraborty
Jindal Steel & Power Limited, New Delhi
Disclaimer: The views provided are author’s own and do not necessary reflect the view of the company