New Delhi: The government proposes to offer deallocated captive coal blocks of private sector companies to Coal India in a bid to accelerate coal production. This would enable the PSU to meet all its fuel commitments to the power sector. The coal ministry, which has so far cancelled allocation of 26 captive coal blocks, is considering to offer bulk of these blocks to CIL so that it can commence production quickly.
“We have the option to offer deallocated blocks to CIL or other government companies and even put the blocks under auction when the process starts in a few months’ time. However, with CIL’s infrastructure, it would be best to offer some of the blocks to coal PSU especially in areas where mines are located closer to its operations,” said a coal ministry official asking not to be named.
The development assumes importance as the 24 deallocated blocks have the potential to generate over 30 million tonne of coal annually, enough to meet long-term fuel requirement of 6,000 MW power projects. Moreover, coal ministry feels that more blocks would be deallocated soon as it has issued show cause notices to another 58 blocks.
“If a large portion of these blocks are offered to CIL, it could easily ramp up production by up to 70-80 million tonne over next few years. This level of additional production, with CIL’s own plan to enhance production, would be adequate to meet the projected fuel requirement of the power sector during 12th Plan period (2012-17),” the official said.
CIL provided 320 mt of coal out of its total production of 436 mt to power projects in 2011-12 against a commitment of 347 mt. The power would require additional coal production of 300-350 mt to meet all the requirements of projects being commissioned in the plan period. As per estimates of the Planning Commission, domestic production of coal would grow to 770 mt by 2017 on the basis of projected annual growth of around 7% but by then demand would shoot up to 1000 mt requiring companies to import 200 mt. The power ministry also expects that CIL’s production at best could be increased fro, about 436 mt now to just about 600 mt by 2017, not enough to meet all the needs of the power sector.
“We have not be communicated about the any move by the government to offer us the deallocated captive coal blocks. Even if an offer is made, we would need to evaluate how soon the blocks could be brought under production,” said a CIL official also not willing to be quoted.
Since 1993, 216 coal blocks have be allocated to eligible public and private companies (into power, steel and cement production) under the Coal Mines (Nationalisation) Act, 1973. Out of these, 24 coal blocks have been deallocated due to undue delays in bringing the blocks under production within a specified period of time. So the net captive blocks at present stands at about 197 blocks with 50 billion tonne of reserves. However, so far only about 28 such blocks have started production and are mining just over 30 million tonne of coal against potential of over 200 million tonne. The government feels that this level of production could be best achieved by CIL.