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Challenges facing India's coal sector

Last updated on: April 19, 2011 16:42 IST

Challenges facing India's coal sector

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Sudheer Pal Singh, Jyoti Mukul in New Delhi

Coal Minister Sriprakash Jaiswal is credited with fast-tracking many issues that are caught in red-tape. The minister says the environment ministry's controversial policy barring mining in forest areas has left him troubled.

What challenges is the coal sector facing?

There have been some concerns like Maoist problems, law and order issues and off take constraints due to lack of availability of rail wagons but for the past one year, a new concern has come from the environment ministry.

It has identified 'Go' and 'No-Go' areas, arguing forests are being cut at a rapid pace, wildlife corridors are being destroyed and we should be more sensitive towards this.

We have given a presentation to the Group of Ministers (GoM) set up by the Prime Minister. We have said we do not intend to go into the 10 per cent dense forest area, but should be permitted to mine in areas of moderate forest cover.

This can be granted to us on the condition that we will carry out three to four times afforestation in these areas, if required.

Some of our projects have been cleared since the GoM was set up. We hope more will be cleared. Prime minister (PM) Manmohan Singh, too, is concerned about the impact on growth.

A middle path has to be found, which will ensure both growth as well as conservation of forests and environment.

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Image: Coal Minister Sriprakash Jaiswal

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Environment minister Jairam Ramesh claims he is not trying to enforce anything that is outside the current environment laws.

We do not have any complaint with the environment minister. He is fulfilling the responsibility given to him. We are fulfilling ours.

If a tug-of-war arises, it is obvious we will take the matter to the PM. We told our problem to the PM and he realised the country's growth is equally important, as coal is already in short supply.

Would you say the environment minister is being a little over-sensitive over the 'No-Go' issue?

I do not think so. If a person has been given a ministry where it is required to be sensitive, we would not call him over-sensitive. He is following his mandate.

Now, the government has to decide whether the law has to be followed or some middle path worked out so that growth is not impacted. The forests, too, have to be saved to the maximum extent possible.

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You cannot blame only environmental activism for the adverse impact on production. Are not Coal India's wn capacity constraints equally responsible for lower production?

The public sector's own problems are always there. You cannot expect it to be on par with the private sector.

Despite these constraints, production went up by 8 per cent last year. But this new problem (of 'No-Go') has certainly troubled us.

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Photographs: Mukesh Gupta/Reuters
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The Eleventh Plan had promised a whole range of coal sector reforms - setting up a coal regulator, ramping up captive production, commercialising, auctioning of blocks, increasing share of e-auction, etc. None of these has happened.

On the regulator, we have received comments from all ministries and the Cabinet note has been prepared. The Bill will be introduced very soon.

It might happen in the next Parliament session. That Bill will go to a standing committee, a six month-long process. The states have no objection on this.

For captive production, we had given blocks. We are assessing the reasons for the delays. Many captive blocks have come under 'No-Go'.

There are some practical problems, too. The blocks of companies which have knowingly delayed production will be de-allocated. The problem is that if we do not de-allocate their blocks, the private sector will cry foul.

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Photographs: Reuters
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Your predecessors had given the impression that surplus in coal production will be reached soon. But you maintain that self-sufficiency in coal production is not possible in the near future.

Definitions change with circumstances and requirements. Coal demand has changed significantly over the past three years. Nobody attached importance to coal 10 years back but today, everybody is running after coal.

Nobody used to buy coal properties abroad five years back. Today, the entire private sector is running after these.

Three years back, we were thinking nuclear power would be available with us. That perception has changed after the Japan nuclear disaster. But, despite all these problems, we have sustained the country's growth.

The demand-supply gap is increasing at a higher rate than what was anticipated. The reason is that industrialisation is on the fast track.

The government is also promoting industrialisation to ensure domestic productivity increases.

For this, the government puts pressure on the coal ministry and Coal India Limited (CIL) to increase production but CIL has its own limitations.

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Are not illegal mining and technological inefficiencies also to be blamed?

Illegal mining happens, we accept it. But the way to stop this would have to come from the state governments. Law and order is a state subject. Coal properties are owned by the state governments.

So, it is their responsibility to save these properties. Royalty from mining goes to the states. Even the money that would come from bidding of blocks would go to the state governments.

This is why we always hold discussions with chief ministers to tackle this issue. We talked to the West Bengal chief minister (CM) who promised a special police unit would be formed for this.

Over a year has passed and I do not think it has been done so far. If any state government itself promotes illegal mining, we cannot do anything sitting in Delhi. In fact, recently a CM also said, "Illegal mining is the cottage industry of our state".

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Photographs: Amit Dave/Reuters
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Don't you think illegal mining occurs with the connivance of coal companies?

I do not deny this. The public sector's performance is known to everybody. The government sector's connivance may be possible. But if the police and the state governments want, it can be reduced.

The idea of commercialisation of coal mining was floated 10 years back to tackle shortages. In the current political environment, is it possible in the next one year to have the Bill passed?

If all parties are ready, the Bill can move forward. It is possible to get it passed in the next one year. In one or two years, a favourable environment for commercialisation will be formed.

The political thinking has changed today from what it was five years back. There are some MPs who have also said it will be difficult to carry out work without commercial mining. A change in mindset is happening slowly.

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Photographs: Rupak De Chowdhuri/Reuters
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When is the next coal price rise likely? Sectors like power were kept out of the impact of the previous one. Will we have a differential pricing policy?

A wage revision is due in July and we may have to hike coal prices then. Wage revision comes with a huge burden but we do not want to hike prices without any reason.

I do not want to react to the query on dual policy. First, we want to see what part of the wage revision's burden we will be able to bear.

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Photographs: Reuters
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