Coal block auction to start shortly; mines auctioned 4 years ago still behind production target

Union minister Pralhad Joshi Wednesday said the auction of coal blocks would commence “very shortly”. The coal minister also said that major policy changes would also be notified very shortly and expressed hope that the auction would be successful.

However, coal mines, which were awarded through flagship e-auction during the BJP’s first term, are still behind the targeted production. Even the ready-to produce mines of the 85 awarded till date have been unable to meet their peak-rated capacity (PRC), four years on.

There are only three mines that have met their annual peak-rated capacity in 2018-19 and only one mine, which is sticking to its mining plan and more than a dozen had nil production during the last financial year. The companies owning these mines — from state agencies of Rajasthan, Telangana, and Chhattisgarh to NTPC, and private companies Balco, Hindalco have expressed a range of challenges faced by their mines in a recent meeting with the coal ministry.

After a Supreme Court judgment cancelled all coal mine allocations made over the past decade, the BJP-led central government held e-auction to reallocate them. Of the 85 awarded through four tranches of auction, 29 were already producing coal when they were cancelled.

Delaying the production plan as approved during the allocation of the mine leads to penalty on the owner. Ministry of Coal confiscates a part of the bank guarantee submitted by the mine owner for every missed target. Last year, Rajasthan was slapped a penalty for missing the mine planning target.

NTPC’s two mines in Jharkhand and Chhattisgarh are embroiled in troubles with their mining contractor. West Bengal Power Development Corporation said road and railway siding work was held up at its two mines, due to local agitation. Odisha also complained about transportation of coal and sale to Coal India. CESC Limited, which owns Sarisatolli mine in West Bengal, said its mine was facing fire problems. Another mine in West Bengal, owned by Durgapur Project, is also delayed due to local issues. Several firms and states claimed that delay in land and forest clearance led to lag in production. Hindalco’s one mine was able to meet 50 per cent production last year and the other it claimed has achieved 90 per cent of its peak rated capacity. Chhattisgarh said it will be producing coal in accordance with the schedule from next year.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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