Increased coal production helps meet PM's power promise
It is only now, says Anil Swarup, that he fully understands what Prime Minister Narendra Modi told him when he first took charge as coal secretary. “Fix coal, fix the economy,” Modi had said. So Swarup, in the nine months since then, has gone about fixing coal and seen the fillip it is giving to power production and in turn to all kinds of economic activity, reducing imports and creating jobs.
Power plants now have 20 to 45 days’ stock of coal. This had come down to two days, one in some cases, and zero at New Delhi’s Badarpur power station last year. Not surprisingly, India, which produces 60% of its electricity from coal, lost 0.4% of its gross domestic product due to power shortages, according to Ficci. Last year, Modi became Prime Minister with a promise of 24x7 electricity to all.
The transformation has been made possible by an unprecedented surge in Coal India’s output. The state-owned miner produced 494 million tonnes in 2014-15, an increase of 32 million tonnes over the previous year. The rise appears much sharper against the cumulative increase in the four years from 2009-10 to 2013-14: just 31 million tonnes. The target for this financial year is 550 million tonnes.
The government targets producing 1.5 billion tonnes of coal by 2019-20, the anticipated demand at that time, assuming 8 to 9% growth in the GDP. Of that, 1 billion tonnes is to come from Coal India.
The rest is to come from private companies that have won blocks in the recent auctions that brought much needed transparency to this sector and soothed nerves in the aftermath of the scandal that led the Supreme Court to cancel 204 allocations made over the last two decades.
“We used the cancellation as an opportunity to bring in transparent procedures,” says Swarup. Of course, some companies seem to have stretched themselves and may face a financial squeeze, but they have been driven by the lure of the 30-year lease and protection from fluctuations in international prices.
Swarup is not much worried about the blocks operated by private companies. “Of the 2019-20 target, 500 million tonnes have to come from private companies. We are allotting enough blocks for 800 to 900 million tonnes. They have to pay the government, so they will do it.” He spends much of his time focusing on creating the right environment for coal mining and evacuation.
Coal India’s target of a billion tonnes in four years, from 550 million tonnes this year, will be a tall task. The challenges are many. It will have to open 70 to 100 more mines, for which land, environment clearances, and state-level clearances have to be obtained. It will have to embrace a lot more mechanisation. Moreover, it will have to change the mindset of a company more accustomed to growing at 1 to 3% a year rather than nearly 100% in four years.
The first steps towards the target hold promise. In the past 10 months, the company has acquired 2,000 hectares for 172 mines and obtained 41 environment clearances. It is cash-rich. So, with land and clearances in the bag, it has been opening a mine every month.
As a result, on the back of the highest volume rise last year in its four-decade history, Coal India pushed its output up by 12.3% in the first quarter this financial year, and 14% in July. Its meetings with the railway ministry, which plays a crucial role in carrying coal from mines to power plants, used to be once a year. Now they meet once every quarter. The result is 121 new projects by the railways to evacuate coal, of which project reports are ready for 60.
The manager at each of Coal India’s mines – hundreds of them – has been told to come up with an evacuation plan. The entire 1 billion tonne target has been mapped mine by mine. Every mine and every truck carrying coal will be watched on screens being put up across the country. The first of those is already up and running at Talcher in Orissa.
“If this is a harbinger, coal deficit will be over long before anticipated,” says Ashish Basu, President-Corporate Function, with GMR, which is into power, roads and airports.
That may happen also because Modi has put his weight behind the effort. “The Prime Minister himself does video conferences (VC) with chief secretaries of states once in two months,” says Coal India Chairman and Managing Director Sutirtha Bhattacharya. Apparently, the thought of the VC, rather than the event itself, gets things done.