Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

POLICY CHANGES REQUIRED FOR INCREASED COAL PRODUCTION

BY

V K ARORA

Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

While coal is a central subject and allocation of coal blocks is done by the Centre but the mining lease is given by the State. No significant progress leading upto the mining could be made by the allottee coal company if the Central State relations are not being used to help the allottee to overcome the various problems. While coal is a Centre subject, land and rehabilitation are governed by the State and unless there is sufficient cooperation by the government, things cannot move in the right direction. Similarly, in regard to the clearance for the environment, pollution, forest etc. the State and the Central government have to work together to enable the block holder to produce the kind of coal needed for the country.


Similarly, in regard to the clearance for the environment, pollution, forest etc. the State and the Central government have to work together to enable the block holder to produce the kind of coal needed for the country.

Total number of captive blocks allotted so far are 289 blocks having reserves of 43 billion M.T. Compare this with CIL which has reserves of 49 billion M.T. and it meets 65% of the demand of the thermal power plants. In the last 4 years, no new linkages have been given, no allocation of coal blocks were given and coal imports are rising.


In 2012-13, India produced 567 MMT of coal and imported 137 MMT. In 2016-17, domestic production for the public sector is expected to be 695 MMT and imports would be 185 MMT.

As per the office of the Coal Controller, captive coal blocks given to the private companies could have brought in 700MMT but all the blocks are mired in corruption, irregularities and delays. The situation and the solutions are all complex.


At present a kind of witch hunting is going on in the country in respect of allocation of coal blocks. It is a fact that the policy for allocation of these blocks has not been transparent nor along well established guidelines whereby applicants could have gone through a fitness test to determine the best possible candidate. The criteria has been vague, in many cases on first come first serve basis and are subject to exploitation, not only by applicants but also by the deciding officers.


On hindsight, we could say that the guidelines and the procedure should have been more explicit. Perhaps auctioning of the coal blocks would have reduced all chances of manipulation.

Having said that, it does not mean that everything about the allocation was wrong. In democracy, people have a right to present their case and if rejected once, have a right to re-present their case. A re-consideration may be ordered by the highest authority in the country if it is felt that the interest of the State would be better served by the re-consideration.


Whether it is politician or a bureaucrat, they seem to be too scared to take any decision or clear any file because they are afraid that at any later time, post his retirement, some vested group may allege corruption or wrong doing behind the clearance. This has resulted in a complete halt to the decision making process.


The trouble is where the policy is not clear and transparent and leaves some scope for some kind of a discretion to be adopted by the deciding officer, there is every likelihood of the discretion being exercised at the cost of some favour. This can only be avoided if the policy had no ambiguity. In hindsight, we can now say, that had there been a policy of auction of coal blocks in place, there would not have been any scope of wrong doing.


Hence the debate as to whether decisions were taken under some consideration or not would continue to bother the public at large.

Having landed ourselves in such a difficult situation what is way out –

These blocks were capable of producing 400-700 MMT of coal but have yet to go off the ground because of policies. How do we get out of it ? on the other hand, the coal shortage is increasing day by day and its a pity that we have to continue importing coal at a great cost and an expense of foreign exchange.


What are the options available with us today –

We continue to accept the allocation of 298 blocks as ‘fait accompli’ and provide assistance to these block holders so that they are able to start production.

Nationalise all the allotted coal blocks and let CIL, its subsidiaries or NMDC or NLC mine all the blocks. This means going back by another 10 years as the track record of these PSUs have not been that encouraging.


India should auction 5 large coal fields which would attract world class coal companies like BHP Billiton, Rio Tinto, Pea Body and these companies are allowed to sell the coal commercially in competition with CIL. This will bring in very huge investment that are needed alongwith latest technologies. Most of the blocks with coal at 150-600m depth require advance technologies for underground mining.


Before we do so, as part of the current law, only CIL, SCCL and NLC can market coal directly. That is why the route of captive mining was adopted. If you have to sell this coal in the market, you have tp change the law for which you need the votes in the Parliament. In this era of coalition government with multi party system, the government neither have nor shall have the strength or the inclination to bring in the change, unless one party has sufficient majority and good cause to bring in the change. Not likely to happen in the present situation.


Various reasons resulting in delay or non start of production in 148 blocks are :-

Delay in Forestry clearance

Delay in Environment clearance

Delay in Land acquisition

Problems of rehabilitation of land oustees and

Project Affected People (PAP)

Adverse Geo-mining conditions

Law & Order problems (including Naxalism)


Year 06-07 07-08 08-09 09-10 10-11

No. Of Blocks 11 15 25 26 28

Production (Mill. T.) 17.6 21.3 30 35.5 34.6

TOTAL NUMBER OF BLOCKS YET TO START PRODUCTION 148

Trend of Coal Production from Captive Blocks in XI Plan


Stage -I Stage - II Stage – III

PLANNING / FEASIBILITY

• Exploration / Preparation of Geological Report• Surface Master Plan• Conducting Studies

- Hydrogeological studies - Socio Economic studies - Transport studies - Environmental studies • Mining Plan - Approval

• Land Requirement

• Applications for Clearances

OBTAINING CLEARANCES• Forest Clearance• Environment ClearanceLAND ACQUISITION AND REHABILITATION & RESETTLEMENT OF PAP’s • Issuance of Notifications• Calculation of Compensation• Disbursement of Compensation• Rehabilitation Action Plan• Physical Possession of Land & Rehabilitation of PAP’sAPPOINTMENT OF MDO

CREATION OF INFRASTRUCTURE• Rail Link• Coal Handling Plant• Approach RoadsMINE DEVELOPMENT• Removal of OB Coal Production

To understand the reasons, let us go through the stages of development of a coal mine :-

Stages in Development of Coal Mine


Detailed Exploration –

As per the guidelines for detailed exploration, boreholes to be drilled in 400 meters interval.In case of detailed exploration in forest area, at present 20 nos. of boreholes allowed in 10 Sq. Km. area.For meaningful Geological Report, at least about 8 nos. of boreholes per Sq. Km. area required. Local resistance during exploration - State support is of utmost importance.


Main Bottlenecks in Captive Mine Development –

•Huge time being taken in obtaining of - Forest Clearance- Environment Clearance

•Land Acquisition – problematic

•Lack of coal transportation infrastructure


Forest Clearance – Cumbersome Process - Various Stages

1. Estimation of Land Requirement2. Application to Nodal Officer/PCCF/DFO for Various 3. Survey of forest area, Enumeration of trees and demarcation of Forest land 4. NOC from Village Advisory Committee / Gram Samittee 5. NOC on jungle-jhari land / Revenue forest by State Govt.6. NOC under FRA-2006


7. DGPS survey & its authentication by State Bodies like ORSAC (in Odisha)8. Processing of Forest proposal : DFO - CF - CCF/RCCF – PCCF - Secy (Forest) State Govt - MoEF, New Delhi9. Site Inspection by Regional office of MOEF – Submission of Report to MOEF, New Delhi10. Presentation to Forest Advisory Committee of MOEF by AIG (Forest)11. Approval of FAC recommendation by Hon’ble Minister of Env. & Forests 12. Stage-I forest clearance by MoEF, Delhi


13. Demand note from DFO for NPV of trees & Compensatory Afforestation - Payment by block allocatee, Identification of land for compensatory afforestation 14. Submission of compliance report of Stage-I clearance to DFO - CF - CCF/RCCF - PCCF - Secy (Forest) State Govt - MoEF, New Delhi15. Processing of Stage-II proposal at MOEF – approval by IG / DG, Forests16. Stage-II clearance from MoEF


17. Order by DFO/RCCF to start demarcation of forest land, Safety zone and CA areas

18. Approval of State Forest Deptt. to start tree felling and transportation of tree logs

MOC schedule stipulates 6 months to complete all these activities – Unrealistic in present scenario


Forest Clearance - Factors contributing to Delay -

Issuance of “No-Objection Certificate” on jungle-jhari by Dist Admn. Issuance of “No-Objection Certificate” on Forest Rights Act by Dist Admn - Conductance of Gram Sabhas & certification of its proceedings. Old / not updated land records / forest records, Mismatch of habitants / persons in actual possession of the forest land, wrt available land records.


Involvement of number of Central / State Government departments and slow processing of proposal at State Forest Dept. and MOEF. Site inspection & submission of inspection report by Regional Office of MOEF to MOEF, New Delhi.

Non-availability of alternate land for compensatory afforestation.


Forest Clearance – Suggested Measures -

Regular updation of land and forest records. Creation of land data bank by Forest Dept. in advance for Compensatory Afforestation. State Forest Department need to process the proposals within strict timelines. Process repetition like site inspection by PCCF as well as Regional Office of MOEF, etc. may be avoided. More number of Forest Advisory Committees (FACs) may be constituted by MOEF.


Environment Clearance - Flow Chart -

Geological Report

Site Clearance / TOR

Mining planApproval

Engagement of Agency

Preparation of EIA/EMP

Submission to SPCB

Public Hearing

NOC from SPCB

Submission of Comprehensive EIA/EMP along with Schedule II

Performa to MOEF

Clearance by Expert Committee

Environment Clearance

Stage I Forest Clearance


Environment Clearance – Suggested Measures -

• State Pollution Control Board may act in time-bound manner –

•Public Hearing•Report submission

• Some sort of environment clearance for cluster of coal blocks may be thought of.• MOEF may consider more number of Expert Appraisal Committees (EACs).


Land Acquisition – Factors contributing to Delay -

• Processing of proposals / issuance of notifications and disbursement of payment by State Govt. / District Admn.

• Non-availability of land records / very old records with Dist Admn.

• Inadequate manpower at Block / Dist. level.

• Slow processing of Govt. land proposals at various level of State Govt.


• Absence of Policy for dealing with encroachers of less than 30 yrs.

• Approval of R&R Plan by State Govt.

• Local resistance - Law & Order situation

• Non-standardization of procedures – varying from State to State.


Land Acquisition – Suggested Measures -

• Specialized land acquisition department/ agencies by State Governments may facilitate land acquisition process such as IDCO in Odisha, MSIDC in Maharashtra.

• Special land acquisition cell at Dist. level.

• Uniform R&R Policy for Coal Mining.


• Regular updation of land records, digitization. Databank of land for public purposes. Maintenance of comprehensive and intelligent map database. Instant production of Cadastral maps of any scales, themes and sizes.

• Processing of land proposals – e-filing.

Mining Industry can grow only with active support & involvement of State Govt.


With the passing of the new land Acquisition LARR Act , the following changes have been made :-

The land price shall be roughly 4 times the normal price Job @ 1 person per family to be given to the affected person An annuity for 20 years has to be paid to the affected family.

Active support & involvement of respective State Govt.


MOC considering ‘Reserve Price’ for coal blocks – Milestone-based payment to State Govt. Special thrust of State Govt. for land record updation & digitization. Expeditious Environment & Forest clearances – Process simplification, Cut short process repetitions, Single-window approach, more nos. of FACs, EACs. Infrastructure Development : Expeditious development of Rail / Road with State support


Dedicated freight / coal corridor Master Network before allocation of coal blocks with firm plan for Rail corridor. Special Task Force for monitoring the project implementation. Adoption of latest technology & best practices in Mining (UG & deep OC), deployment of high capacity HEMM, indigenous manufacturing.


The proposal of auction of coal blocks –

Govt. of India has published a gazette on auction of coal blocks on February 2, 2012. Since then Govt. of India allocated 14 blocks to PSUs but no bidding has been done for allocation to private companies.

Since the bidder is exposed to geological risks of coal deposit (faults, folds etc) which can drastically impact project viability, it is suggested to auction only explored blocks. This will reduce project risk drastically leading to better chances of project success.


Moreover, even if an unexplored block is given to a party he will have to go for exploration prior to mine construction. Thus the project execution time remains same for unexplored blocks. Hence it is suggested that unexplored blocks are brought under explored category by the government and then auctioned. Thus there is a requirement of extensive and expeditious exploration by the government.


Although the process for bidding has not yet been announced , it is likely to include upfront payment of the “intrinsic value” of coal and a per tonne payment after mining is started. It is suggested that there should only be a per tonne payment after mining is started since the coal block does not generate any cash flow before the same starts . An upfront payment is locked capital with the timelines for regulatory clearances not being defined or certain.


RECOMMENDATIONS


After preparation of Mine Plan, can there be a single window clearance – for environment, forest, pollution etc. Let all of them sit together and give the clearance within certain time frame. It was tested and tried in Indonesia at some stage.

Land Acquisition has to be made simpler – let there be economic cost for the welfare of the displaced persons, but process has to be simpler than what is being proposed.


It is to be understood that the person investing his time, effort and money to do the mining is not a criminal but an upright person, who wants to be fair to everyone.


THANK YOU


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Thapar House | 25 Brabourne Road | Kolkata | WB | 700001