coal sector development in india sample

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Table of Contents

TABLE OF CONTENTS

1. Coal Sector in India: Snapshot ............................................................................................................................ 1

1.1 Introduction .................................................................................................................................................. 1

1.2 Coal Resources in India ................................................................................................................................. 2

1.2.1 State Wise Allocation ............................................................................................................................. 2

1.2.2 Category-Wise Coal Resources .............................................................................................................. 3

1.3 Industry structure ......................................................................................................................................... 3

1.3.1 Roles and Responsibilities of Key Agencies Involved ............................................................................. 3

1.4 Sector Wise Consumption Trends................................................................................................................. 4

1.4.1 Power Sector .......................................................................................................................................... 5

1.4.2 Steel sector ............................................................................................................................................ 7

1.4.3 Cement sector........................................................................................................................................ 7

1.5 Financial Performance of Coal Sector During Eleventh Five year plan ......................................................... 7

1.6 Key Developments 2012-2013 ...................................................................................................................... 8

1.7 Conclusion .................................................................................................................................................... 9

2. Global Scenario ................................................................................................................................................. 10

2.1 Introduction ................................................................................................................................................ 10

2.2 Global Market Trends-H1 2013 .................................................................................................................. 11

2.2 Country Wise Production trends ................................................................................................................ 12

2.2.1 United states ........................................................................................................................................ 13

2.2 China ....................................................................................................................................................... 14

2.3 Australia .................................................................................................................................................. 15

2.4 Indonesia ................................................................................................................................................ 16

2.5 Russia ...................................................................................................................................................... 17

2.6 Germany ................................................................................................................................................. 18

2.3 Global Coal Production Forecast ................................................................................................................ 18

3. Latest Policies and Regulatory Issues ............................................................................................................... 19

3.1 New Reforms Proposed by the Government .............................................................................................. 19

3.2 New Fuel Supply Agreement Policy ............................................................................................................ 21

Table of Contents

3.2.1 Power Plants/Units Where FSAs Are Yet To Be Signed........................................................................ 26

3.2.2 Recent Amendment in FSA Agreement ............................................................................................... 33

3.3 PPP model on coal mining .......................................................................................................................... 34

3.4 COAL REGULATORY Authority BILL ............................................................................................................. 34

3.4.1 BACKGROUND ...................................................................................................................................... 35

3.4.2 Structure of the Regulatory Authority ................................................................................................. 35

3.4.3 Functions and Powers of the Coal Regulatory Authority ..................................................................... 35

3.4.4 Advisory Functions ............................................................................................................................... 36

3.4.5 Regulation of Pricing of Coal ................................................................................................................ 36

3.4.6 Funding of the Regulatory Authority ................................................................................................... 36

3.4.7 Accountability ...................................................................................................................................... 36

3.4.8 Dispute Resolution ............................................................................................................................... 37

3.4.9 Appellate Tribunal ............................................................................................................................... 37

3.5 E Auction ..................................................................................................................................................... 37

3.6 new Mineral and Mines (Regulation and Development) Act, 2010 ........................................................... 39

3.6.1 The Mines and Minerals (Development and Regulation) Bill 2011 ..................................................... 40

3.7 new Land Acquisition Bill Proposal and its Implications ............................................................................. 41

3.7.1 Key Highlights ...................................................................................................................................... 42

3.7.2 Compensation Mechanism Used ......................................................................................................... 43

3.7.3 How are investor concerns addressed ................................................................................................. 43

3.8 Conclusion .................................................................................................................................................. 44

4. Domestic Coal Reserves and Production Status ............................................................................................... 45

4.1 Inventory of Geological Resource of Indian Coal ........................................................................................ 45

4.1.1 Type And Category-Wise Coal Resources Of India............................................................................... 45

4.1.2 State Geological Resources Of Coal ..................................................................................................... 46

4.2 Total Number Of Mines .............................................................................................................................. 46

4.3 Annual Coal Production Trends .................................................................................................................. 47

4.4 Company-Wise Coal Dispatches Trends ..................................................................................................... 47

4.5 All-India Coal Production During Eleventh Plan .......................................................................................... 49

Table of Contents

4.6 Company-Wise Target And Actual Coal Production In India ...................................................................... 50

4.7 State-Wise Coal Production Trends ............................................................................................................ 51

4.8 Trends Of Coal Production From Opencast & Underground Mines ........................................................... 52

4.9 PRODUCTION FROM BLOCKS ALLOCATED TO POWER SECTOR .................................................................. 54

4.9.1 Details of Coal Blocks Allocated to Private Sector for IPPs/ CPPs ........................................................ 55

4.10 Company-wise Challenges faced in increasing coal production ............................................................... 57

4.11 Foreign Collaboration Initiatives to increase coal production .................................................................. 58

4.11.1 COOPERATION WITH CANADA .......................................................................................................... 59

4.11.2 COOPERATION WITH FRANCE............................................................................................................ 59

4.11.3 COOPERATION WITH U.K. .................................................................................................................. 60

4.11.4 COOPERATION WITH POLAND ........................................................................................................... 60

4.11.5 CO-OPERATION WITH RUSSIA............................................................................................................ 61

4.11.6 COOPERATION WITH KAZAKHSTAN ................................................................................................... 61

4.11.7 COOPETATION WITH MOZAMBIQUE ................................................................................................. 62

4.11.8 CO-OPERATION WITH GERMANY ...................................................................................................... 62

4.11.9 CO-OPERATION WITH AUSTRALIA ..................................................................................................... 63

4.11.10 COOPERATION WITH CHINA ............................................................................................................ 64

4.11.11 COOPERATION WITH USA ................................................................................................................ 65

4.11.12 COOPERATION WITH SOUTH AFRICA .............................................................................................. 66

4.11.13 Cooperation with Japan ................................................................................................................... 66

5. Status of Coal Blocks Allocated ......................................................................................................................... 67

5.1 Number of Coal Blocks Allocated to Public and Private Sector Companies ............................................... 69

5.2 Progress of Development of Coal Blocks Allocated to NTPC ...................................................................... 69

5.3 Status of Captive Coal and Lignite Blocks ................................................................................................... 71

5.4 Coal Block Allocation to Power Companies (August 2012) ......................................................................... 72

5.5 De-Allocated Coal Blocks ............................................................................................................................ 73

5.6 Recent Developments ................................................................................................................................. 73

6. Demand Supply Gap Analysis ........................................................................................................................... 75

6.1 Introduction ................................................................................................................................................ 75

Table of Contents

6.2 Impact of Coal shortage .............................................................................................................................. 76

6.2.1 Critical Coal Stock Position of Key Thermal Stations ........................................................................... 76

6.2.2 Year Wise Generation Loss due to Coal shortage ................................................................................ 77

6.2.3 Affected and Stranded Thermal capacity- Present and Projected ...................................................... 78

6.2.4 Falling PLF of Coal Based Generating Plants ........................................................................................ 79

6.3 Coal Shortage Projections during Twelfth Plan .......................................................................................... 80

6.4 Coal Requirement Projections during XIII Plan ........................................................................................... 81

6.5 Sector wise coal demand projections ......................................................................................................... 82

6.6 Suggested measures to overcome coal crisis ............................................................................................. 82

6.6.1 Domestic coal production to be augmented to reduce dependence on imports ............................... 83

6.6.2 Expedite implementation of coal procurement and pricing ................................................................ 83

6.6.3 Increase in fuel cost (imported coal) to be made pass-through .......................................................... 84

6.6.4 Coal imports by project companies directly with fuel pass ................................................................. 85

6.6.5 Other Medium and long term remedial measures .............................................................................. 85

7. Role of Imported Coal in Existing Scenario ....................................................................................................... 86

7.1 Introduction ................................................................................................................................................ 86

7.2 Year-wise Import of Coal ............................................................................................................................ 86

7.3 Coal Import by Power Utilities in 2012-13 .................................................................................................. 87

7.4 Import of Coal by NTPC ............................................................................................................................... 89

7.4 Expected Hike in prices due to rising coal imports ..................................................................................... 90

7.5 Key Issues and Challenges .......................................................................................................................... 91

7.6 Country wise import of Coal ....................................................................................................................... 92

7.7 Recent Developments ................................................................................................................................. 93

7.8 Coal Imports Forecast ................................................................................................................................. 94

8. Overseas Coal Acquisition................................................................................................................................. 95

8.1 Introduction ................................................................................................................................................ 95

8.2 Indonesia .................................................................................................................................................... 95

8.2.1 Introduction ......................................................................................................................................... 95

8.2.2 Indonesian Coal Quality and Costs Involved ........................................................................................ 95

Table of Contents

8.2.3 Recent Regulatory Update- Foreign Investment in the Indonesian Coal Mining Industry .................. 96

8.2.4 Regulation Details ................................................................................................................................ 96

8.2.5 India CoMpanies Investment in Indonesian Coal Mines ...................................................................... 97

8.3 Australia ...................................................................................................................................................... 98

8.3.1 Introduction ......................................................................................................................................... 98

8.3.2 Recent Challenges restraining foreign investment in Australian Coal Mining Industry ...................... 98

8.3.3 Initiatives taken by the new government so far .................................................................................. 99

8.3.4 Indian investments in Australian coal mines and export infrastructure ........................................... 100

8.4 South Africa .............................................................................................................................................. 100

8.4.1 Introduction ....................................................................................................................................... 100

8.4.2 Challenges for Foreign Investors in the South African Coal Industry: ............................................... 101

8.4.3 South Africa government keen on promoting investment from Indian Companies ......................... 101

8.4.4 Indian companies’ investment in South African Coal Sector ............................................................. 102

8.5 Mozambique ............................................................................................................................................. 102

8.5.1 Introduction ....................................................................................................................................... 102

8.5.2 Challenges in Mozambique ................................................................................................................ 103

8.5.3 Indian Companies Investment in Mozambique Coal Sector .............................................................. 104

8.6 Comparison Matrix: Top Four Coal Producing Nations ............................................................................ 105

9. Coal Technologies ........................................................................................................................................... 107

9.1 Coal Mining Technologies ......................................................................................................................... 107

9.1.1 Opencast Mining ................................................................................................................................ 107

9.1.2 Underground Mining ......................................................................................................................... 110

9.2 Technology Initiatives taken by CIl in recent Years .................................................................................. 111

9.2.1 Sourcing Technology .......................................................................................................................... 112

9.3 Combustion Technologies ............................................................................................................................ 113

9.3.1 Sub Critical ......................................................................................................................................... 113

9.3.2 Super Critical ...................................................................................................................................... 113

9.3.2.1 Few Upcoming Coal plants based on super critical technology ..................................................... 114

9.3.4 Advanced Ultra Supercritical Technology .......................................................................................... 120

Table of Contents

9.4 Gasification and combined cycle power generation (IGCC) technologies ................................................ 121

9.4.1 Surface Coal Gasification ................................................................................................................... 121

9.4.2 Underground Coal Gasification .......................................................................................................... 123

9.4.3 Examples of few Upcoming coal plants based on IGCC Technologies ............................................... 124

10. Coal Prices ..................................................................................................................................................... 125

10.1 Domestic Coal Prices ............................................................................................................................... 125

10.3 International Coal Prices Trends ............................................................................................................. 127

10.3.1 Indonesian Coal Prices ..................................................................................................................... 128

10.3.2 AustraliaN Coal Prices ...................................................................................................................... 129

10.3.3 South African Coal Prices ................................................................................................................. 129

10.3.4 Columbia Coal Prices ....................................................................................................................... 130

10.2 Domestic Vs International Price Comparison ......................................................................................... 130

10.1.1 Recommendations of Ministry of Power on Price Pooling of Imported Coal - May 2013 ................... 131

10.1.1.1 Option A - (Pooling for pre 2009 and post 2009 plants) ............................................................... 136

10.1.1.2 Option B - (Pooling Only for post 2009 plants) ............................................................................. 138

10.1.1.3 Option C - (Pooling for all plants excluding pre 2009 State plants including pre 2009 NTPC plants)

.................................................................................................................................................................... 140

10.1.1.4 Option D - (Based on CCEA decision) ............................................................................................ 142

11: Coal Washeries ............................................................................................................................................. 143

11.1 Introduction ............................................................................................................................................ 143

11.2 Advantages of Coal Washing .................................................................................................................. 143

11.3 Details of Existing Coal Washeries .......................................................................................................... 144

11.3.1 State Wise Coal Washeries status ................................................................................................... 145

11.3.2 Consumer Wise Coal Washeries Details .......................................................................................... 145

11.3.3 Details of Coal Washeries setup by CIL ............................................................................................ 146

11.4 performance of coal washeries in operation in the XI plan period ........................................................ 148

11.4.1 Coking Coal ...................................................................................................................................... 148

11.4.2 Non Coking Coal ............................................................................................................................... 149

11.5 Non-coking coal washery installed capacity, utilization and yield.......................................................... 150

Table of Contents

11.6 Coal Washeries Proposed by CIL ............................................................................................................. 150

11.7 Technology .............................................................................................................................................. 151

11.7.1 Existing Technologies ....................................................................................................................... 153

11.8 Washed Coal Requirements by Sectors .................................................................................................. 154

11.9 Economic Benefits of Coal Washing ....................................................................................................... 156

11.10 Business Models ................................................................................................................................... 156

11.10.1 Existing Model ............................................................................................................................... 157

11.10.2 Business Model for Private Operators ........................................................................................... 158

11.11 Key Challenges Faced by Coal Washeries ............................................................................................. 160

11.12 Comparative Ranking of Different States Basis Risk Profile.................................................................. 163

12. Coal Scam Implications ................................................................................................................................. 165

12.1 What is Coalgate Scam ........................................................................................................................... 165

12.2 Benefits to the Private Players ................................................................................................................ 165

12.2 Blocks Allocation Details as Highlighted by CAG..................................................................................... 166

12.3 Action taken by the Government ........................................................................................................... 168

12.4 Impact of Deallocation ............................................................................................................................ 170

13. Other Recent Developments ........................................................................................................................ 172

13.1 Company Related .................................................................................................................................... 172

13.2 Industry Related...................................................................................................................................... 175

13.3 Coal Import/Export/Acquisitions ............................................................................................................ 176

13.4 Coal Production ...................................................................................................................................... 179

13.5 Regulatory News ..................................................................................................................................... 181

Chapter 14: Company Profiles ............................................................................................................................ 184

14.1 COAL INDIA LTD ...................................................................................................................................... 184

14.1.1 COMPANY OVERVIEW ..................................................................................................................... 184

14.1.2 Strategic Vision ................................................................................................................................ 184

14.1.3 Subsidiaries of Coal India Ltd: .......................................................................................................... 184

14.1.4 CIL Production Trends ...................................................................................................................... 186

14.1.5 CIL Financial Highlights .................................................................................................................... 187

Table of Contents

14.1.5 SWOT Analysis of Coal India Ltd. ..................................................................................................... 188

14.1.6 Recent Developments ...................................................................................................................... 191

14.2 Eastern Coalfields Limited ...................................................................................................................... 192

14.2.1 Production Performance ................................................................................................................. 192

14.2.2 Swot Analysis ................................................................................................................................... 194

14.2.3 Recent Developments ...................................................................................................................... 195

14.3 Northern Coalfields Limited .................................................................................................................... 195

14.3.1 Coal Production ............................................................................................................................... 195

Off-Take ...................................................................................................................................................... 196

14.3.2 FINANCIAL REVIEW .......................................................................................................................... 197

14.3.3 Future investment ........................................................................................................................... 197

14.4 Western Coalfields limited ..................................................................................................................... 198

14.4.1 Production Statistics ........................................................................................................................ 198

Coal Offtake ................................................................................................................................................ 199

14.4.2 Financial Performance ..................................................................................................................... 199

14.5 Central Coalfields Limited (CCL) .............................................................................................................. 200

14.5.1 Production Statistics ........................................................................................................................ 200

14.5.2 Financial Performance ..................................................................................................................... 202

14.6 South Eastern Coalfields Ltd ................................................................................................................... 203

14.6.1 Company Overview .......................................................................................................................... 203

14.6.2 Production Statistics: ....................................................................................................................... 203

14.6.3 SECL Financial Highlights ................................................................................................................. 205

14.7 Bharat Coking Coal Limited ..................................................................................................................... 207

14.7.1 Coal Production of BCCL .................................................................................................................. 207

14.7.2 Financial Performance of BCCL ........................................................................................................ 208

14.8 Mahanadi Coalfields Limited (MCL) ........................................................................................................ 209

14.8.1 Production Performance of Mahanadi Coal Fields .......................................................................... 209

14.8.2 Financial Performance of MCL ......................................................................................................... 210

14.8.3 Swot Analysis of Mahanadi Coalfileds ............................................................................................. 211

Table of Contents

14.9 Singareni Collieries Company Limited .................................................................................................... 212

14.9.1 Coal Production ............................................................................................................................... 212

14.9.2 Swot Analysis of Singareni Collieries Company Ltd ......................................................................... 214

14.9.3 Recent DevelopmentS ..................................................................................................................... 217

14.10 Gupta Coalfields & Washeries Ltd ........................................................................................................ 218

14.10.1 Gupta Group Business ................................................................................................................... 219

14.10.2 Financial Performance of Gupta .................................................................................................... 219

14.11 Aryan Coal Benefications Private Limited ............................................................................................. 220

14.11.1 Fianacial Performance ................................................................................................................... 220

14.11.2 Strengths ........................................................................................................................................ 221

Annexure ............................................................................................................................................................ 222

Chapter 1: Coal Sector in India

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1. COAL SECTOR IN INDIA: SNAPSHOT

1.1 INTRODUCTION

India is the third-largest economy in the purchasing power parity (PPP) index, next to USA and China and the second-largest growing economy based on real GDP. With the rising economic activity, demand for energy sources has also been growing consistently. At present, fossil fuels, viz oil, gas and coal meet around four fifth of the total energy demand in the world, which will continue to command a predominant share in the next two decades or so.

As per the BP Statistics 2013, country-wise energy consumption reveals that, India is the fourth largest energy consumer accounting for 5.1% (563.51 Mtoe) of the global energy use as of December 2012. It is followed by the US (17.7% or 2,208.8 Mtoe), Russia (5.6% or 694.2 Mtoe). However, in terms of fastest growing energy consuming countries in last ten years, India is the world’s fifth-fastest energy consumer with a CAGR of 6.1%.

Figure 1.1: Country wise Trends in Energy Consumption

Source: BP Stats 2013 and Cerebral Research

From the above statistics, it is clear that India's energy needs are expanding too fast with its increased industrialization and capacity addition in Power generation. This is where 'Coal' steps in. In India coal is the critical input for major infrastructure industries like Power, Steel and Cement.

2735

2209

694563 478

329 312 275 271 245

Top 10 World Energy Consumers (MTOE), 2012

9.8%9.3% 9.3%

6.3% 6.1% 5.9% 5.9% 5.8% 5.7% 5.4%

World's Fastest Energy Consumers, 2002-12 (%)

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Figure 1.2: Key facts stating importance of coal in India's energy scenario

Source: Cerebral Business Research

1.2 COAL RESOURCES IN INDIA

As a result of exploration carried out up to the maximum depth of 1200m by the Geological Survey of India (GSI), Central Mine Planning and Design Institute (CMPDI), Singareni Collieries Company Ltd (SCCL) and Mineral Exploration Corporation Limited (MECL) etc, a cumulative total of 2,93,497 Million Tonnes of Geological Resources of Coal have so far been estimated in the country. The coal resources of India are available in older Gondwana Formations (292005 MT) of peninsular India and younger Tertiary formations (1493 MT) of north-eastern region. The details of state-wise and category wise geological resources of coal (as on 01/04/2012) are given below.

1.2.1 STATE WISE ALLOCATION

Most coal reserves are located in the eastern parts of the country. Jharkhand, Chhattisgarh, and Orissa account for approximately 70 percent of the country's coal reserves. Other significant coal producing states include West Bengal, Andhra Pradesh, Madhya Pradesh, and Maharashtra.

Figure 1.3: State wise coal resources allocation (%)

Source: Ministry of Coal, Cerebral Research

Coal meets around 52% of India's

primary commercial energy needs against 29%

the world over

Around 66% of India's power

generation is coal based

India is the third largest coal

producing country in the world after

China and US

India has the fifth largest coal

reserves in the world

Andhra Pradesh8%

Maharashtra4%

Others1%

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1.2.2 CATEGORY-WISE COAL RESOURCES

Out of 293.5 billion tonnes (Bt) of coal reserves—“Prime” coking coal are 5.3 Bt, Medium & Semi-coking coals are 28 Bt and Non-coking coals 250.8 Bt. Most of these resources occur in Gondwanas and the balance in the Tertiary formations.

Table 1.1: Type and Category-wise coal resources of India as on 1.4.2012, (in Million Tonnes)

Type of Coal Proved Indicated Inferred Total (A) Coking :-

-Prime Coking 4614.35 698.71 0 5313.06

-Medium Coking 12836.84 11951.47 1880.23 26668.54

-Semi-Coking

Sub-Total Coking

(B) Non-Coking:-

(C) Tertiary Coal

Grand Total Source: Ministry of Coal

1.3 INDUSTRY STRUCTURE

Currently, the government enjoys a monopoly in producing coal with over 90% of the production

coming from government-controlled mines. The policy for captive mining was introduced in 1993. This opened the coal sector to private investment, although no promising progress has been made in

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1.4 SECTOR WISE CONSUMPTION TRENDS

In India, the end-use sectors of coal mainly include electricity, iron and steel and cement. Demand

from the unorganized small scale sector comprising primarily of the brick and ceramic industry is

relatively large though infirm as users switch between coal, firewood and biomass depending on their relative price.

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Figure 1.4: Sector-wise Coal Consumption (%)

Source: Planning Commission as per XII plan estimates and projections 1.4.1 POWER SECTOR

As of September 30, 2013, coal-based installed capacity in India was 134.4 GW, accounting for around 59% of the country’s total capacity. Despite issues such as coal shortages, delays in coal

transportation, high carbon emissions, relatively low plant load factors (PLFs) and operational inefficiencies affecting power generation from coal, it still emerges as the most-preferred fuel for

future capacity additions due to economic and energy security reasons. Coal’s share in India’s total power generation has increased from 65 GW in 2004 to 130 GW in 2013 at a CAGR of about 8%.

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Power utilities,

66%

Others, 13%

Sector wise consumption Projected 2012-13 Sector wise consumption Projected 2016-



Figure 1.5 Break-up and Growth of Installed Coal Capacity, as of June 30, 2013 (%, GW)

Source: CEA, Cerebral Business Research

However, coal supply has not kept pace with the growth in generation capacity. In terms of last five years demand supply analysis, Generation capacity (coal) grew at CAGR of 14.2% p.a. over last 5

years, whereas, coal supply has grown at a negligible CAGR of 6% p.a. during this period.

Table 1.2: Coal Demand Supply Analysis, FY2009-13

Particulars FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 CAGR (%)

Capacity (MW) 77,600 14.2%

Coal supply (MT) 363.0 6%


In FY13, the demand for coal exceeded its supply by around 192 MT

. Content Deleted

Coal59%Diesel

1%0%

5%

10%

15%

20%

25%

0

20

40

60

80

100

120

140

160

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Sep'

13

Coal Based Capacity Installed (GW)Y-o-Y Growth (%)- RHS

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Table 1.3: Details of Affected and Stranded Capacity due to coal shortage

Particulars Capacity at January 31, 2013 (MW) (A)

Capacity addition for balance XIIth plan (MW) (B)

Capacity at March 31, 2017 (MW) (A+B)

Coal Gas Total Coal Gas Total Coal Gas Total

Installed Capacity

122,900

Affected Capacity

53,000

Stranded Capacity

8,800 60,300


Impacts of the coal supply deficit on power sector are:

• Presently 71,900 MW capacity affected due to inadequate coal/gas in FY13 • Investments of INR 340,000 Crore impacted

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• Enhance long term energy security through proactive planning for future fuel demand and supply as well as the optimal fuel mix

1.4.2 STEEL SECTOR

Coal is an essential input in the production of steel and presently about 70% of the world's steel production is based on coal. The Indian steel industry has been facing severe coal shortage for last

several years.

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1.4.3 CEMENT SECTOR

India is the second largest producer of cement in the world. Large amount of energy is required

during the production of cement and coal is used as an energy source.

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1.5 FINANCIAL PERFORMANCE OF COAL SECTOR DURING ELEVENTH FIVE YEAR PLAN 1

The Eleventh Plan outlay of 37,100 crore for MoC was planned to be financed through an Internal and Extra Budgetary Resources (IEBR) of 35,774.37 crore, and

Content Deleted Table1.4: Financial Performance of the Coal Sector

S.No. Sector Eleventh Plan Outlay

Approved MTA Anticipated 1 CIL 17,390.07 16,090.68 13,460.78 2 SCCL 3 NLC-Power 4 NLC- Mines 5 Total NLC Total IEBR 6 Central Sector Schemes Total MOC Source: Planning Commission

1.6 KEY DEVELOPMENTS 2012-2013

In the recent past, India’s coal sector has received a lot of attention highlighting various problems

faced by the sector such as:

1. Captive block allocation: The Government Auditor or the Comptroller and Auditor General (CAG), in a recent report, estimated the losses due to the government’s policy of giving out coal

blocks for free to the tune of Rs1.86 lakh crore.

2. Content Deleted

3.

4. 5. Disinvestment of Coal India Ltd.: The government intends to disinvest 5 per cent of paid up

equity capital or over 31.58 crore shares of CIL through Offer for Sale of shares by promoters through the stock exchanges.

1 Source: Planning Commission



1.7 CONCLUSION

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Chapter 2: Global Scenario


2. GLOBAL SCENARIO

2.1 INTRODUCTION

Worldwide, compared to all other fossil fuels, coal is the most abundant and is widely distributed across the continents. Coal is also the second most dominant source of primary energy behind oil,

accounting for approximately 28% of total primary energy consumption.

Content Deleted ng economic performance – are key drivers of coal consumption among these emerging economies.

Figure 2.1: Total World Production and Consumption Trends, as of 31 Dec 2012 (in BToe)

Source: BP Statistical Report 2013

Content Deleted

2426

2829

3132

33 3435

3838

24

2628

2931

32 33 32

3536

37

20

22

24

26

28

30

32

34

36

38

40

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

1.0 1.1

2.9 2.7

0.2 0.30.3 0.2



Table 2.1: Country Wise Reserves and Production Details, 2012


2.2 GLOBAL MARKET TRENDS-H1 2013

• The rapid expansion of coal demand and supply experienced over the last decade was driven by the rise in demand by China and other Asian economies.

• Content Deleted • • • • • • • The market for coal-fired power stations took a hit last year when the World Bank announced it

will no longer lend countries money to build them.

2.2 COUNTRY WISE PRODUCTION TRENDS

China is having huge production of coal which accounts to about 49% of the total production,

followed by US, Australia, Indonesia and India.

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S No. Countries Reserves (MT) Reserves in % of total

Production (MTOE) Share of total

1 USA 237295 27.60%

2 Russia

3 China

4 Australia 76400

5 India 60600

6 Germany

7 Kazakhstan

8 South Africa

9 Poland

10 Indonesia

11 Others

Total 860938 100.00% 3845.30 100.00%



Figure 2.2: Country Wise breakup, Coal Production, as of December 31, 2012


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Figure 2.3: Production and Consumption pattern of key countries, 2012 (mtoe)


0

100

200

300

400

500

600

Production Consumption

78

192 187

74

34



2.2.1 UNITED STATES

On analyzing last five year coal production and consumption trend, it is seen that, both production as well as consumption are falling.

Content Deleted

Figure 2.4: U.S. Coal Production and Consumption, 2008 - 2012 (MToe)

Source: BP Statistical Review 2013

2.2 CHINA

China is world’s largest producer and consumer of coal, and accounts for more than 45% of both

global totals. China accounted for more than three-quarters of incremental coal production in 2012 and domestic

Content Deleted

596.7540.8 551.2 556.1

515.9

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

2008 2009 2010 2011 2012



Figure 2.5: China Coal Production and Consumption, 2008 - 2012 (MToe)


In terms of import export trends, China, typically was a net coal exporter, and became a net coal importer in 2009 for the first time nearly after two decades.

Content Deleted

2.3 AUSTRALIA

Production & consumption

Coal plays a major role in meeting domestic energy needs, accounting for about 69 percent of Australian electricity generation.

Content Deleted

0.0

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1800.0

2000.0

1401.01486.5

1617.51758.0 1825.0

1369.21470.7

1609.71760.8

1873.3



Figure 2.6: Australia Coal Production and Consumption, 2008 - 2012 (MToe)


Clearly from the graph above, it is seen that the gap between production and consumption is very high. Consumption is much below the production, which is the prime reason of Australia being the

second largest coal exporter in the world.

Content Deleted Year Import Export

2003 0 230,395

2004 0 2005 0 2006 56 2007 2008 2009 2010 2011 CAGR 0.95% 3.93% Source: EIA

2.4 INDONESIA

0

50

100

150

200

250

300



Unlike many other countries, Indonesia's government encourages increased use of coal in the power sector, due to relatively abundant domestic supply and as a way to reduce the use of expensive

diesel and fuel oil.

Content Deleted 2.3 GLOBAL COAL PRODUCTION FORECAST

According to the estimates from U.S. Energy Information Administration (EIA), global coal production is expected to reach 11.5 billion tonnes by 2040,

Content Deleted

Source: U.S. Energy Information Administration, International Energy Outlook 2013 Report

4725

1080

696

537

400

358

5633

1156

850

589

434

432

5722

1177

993

685

446

501

2020 2030 2040

Chapter 3: Latest Policies and Regulatory Issues


3. LATEST POLICIES AND REGULATORY ISSUES

Indian coal industry is monopolised by a single producer i.e. Coal India Limited. In year 2000, a bill was introduced in the parliament to amend the acts related to private participation and allow

private participants in coal sector. However, the bill failed to gain the necessary support. The absence of legislative amendments required to induct competition make the sector vulnerable to

the ill effects, viz. lack of quality technology and production methods, lack of transparency in coal block allocations, falling production, price increases, etc.

Content Deleted Table 3.2: Details of the FSAs concluded with power plants commissioned during 1.4.2009 till 05.08.2013

S.No.

Year of Commissioning

Power Plants/Units Company

Capacity (MW)

FSA Qty. (Mt)

Date of Execution/ Migration to FSA Model Oct'12

Remarks

1 2011-12 Bajaj Energy Private Limited (Khamberkhera Unit-I & II)

CCL 90 0.390 21/11/2012

2 2011-12 Bajaj Energy Private Limited (Maqsoodpur unit-I & II)

CCL

3 2011-12 Bajaj Energy Private Limited (Barkhera Unit-I)

CCL

4 2009-10 Rosa Power Supply Company Limited Phase I ( Unit I)

CCL

82 2012-13 Vellure'Unlt-2 MCL 500 2.310 24/07/2013

Total 34793 131.066

Source: Ministry of Coal

Content Deleted

Chapter 3: Latest Policies and Regulatory Issues


Table 3.4: List of Power Plants/Units appearing in the MOC letters dated 17.02.12 as well as and 17.07.13 where FSAs are yet to be signed

S.No. Unit/Plant Name

(Details)

Company Name

Name Of subsidia

ry compan

y

Capacity

(Mw)

Quantity as per LOA (mt)

COD date

(confirmed/

Expected)

Reason(s) for not signing of FSA

1 Pathadi (UNCO) Unit- 1

UNCO Power Limited

SECL 300 1.450 09.04.2010

The unit is not having PPA and reluctant to sign FSA in the new model.

2 Bhilai JV Unit-1

JV (NTPC+SAIL)

SECL 250 1.200 21.10.2009

Since it is in the category of CPP, Not eligible for execution of FSA as IPP. It has been informed to the JV for signing the FSA in CPP category.

38 Muzaffarpur TPP, Unit-2

JV (NTPC+BSEB)

ECL 195 0.609 ECL vide letter dated July 26, 2013 requested the unit for signing of FSA. The JV has to come forward for signing the FSA.

Source: Minstry of Coal

Government intervention to resolve the issue between CIL and power companies

To strike a middle ground between CIL and power companies, the Prime Minister Office (PMO) has

intervened and suggested a revision to CIL’s new FSA to address the concerns of all stakeholders.

Content Deleted Table 3.5: Details of coal blocks allocated under the new rules

Sl. No

Coal Block / Capacity / Host State

Proposed Applicant State/CPSU

Proposed Govt. Company Proposed allocated Coal Reserves(MT)

1 Tentuloi/1234 MT/Odisha Odisha Odisha Thermal Power Corporation

Ltd. (OTPCL) 1234.00

2 Bhalumuda/550 MT/Chhattisgarh CPSU / NTPC NTPC Ltd. 550.00

14 Kalyanpur-Badalpara/102 MT/ Jharkhand

Harayana HPGCL 51.00

UP UPRVUNL 51.00


Chapter 5: Status of Coal Blocks Allocated


4. DOMESTIC COAL RESERVES AND PRODUCTION STATUS

India has the fifth largest coal reserves in the world. Of the total reserves, nearly 88% are non-coking coal reserves. The country’s coal production has increased from 431 MT in 2006-07 to 554 MT*

in2011-12 (CAGR 5.1%). On the other hand, the demand for coal has grown at a CAGR of more than 7% in the last decade and has reached around 600 MT in 2012-13.

Content Deleted

Table 4.1: The Type and Category-wise coal resources of India as on 1.4.2012 (in Million Tonnes)

Type of Coal Proved Indicated Inferred Total (A) Coking :- -Prime Coking 4614.35 698.71 0 5313.06 -Medium Coking -Semi-Coking

Sub-Total Coking (B) Non-Coking (C) Tertiary Coal

Grand Total 118144.81 Source: Ministry of Coal

4.1.2 STATE GEOLOGICAL RESOURCES OF COAL

Most coal reserves are located in the eastern parts of the country. Jharkhand, Chhattisgarh, and

Orissa account for approximately 70 percent of the country's coal reserves. Other significant coal producing states include West Bengal, Andhra Pradesh, Madhya Pradesh, and Maharashtra.

Table 4.2: Gondwana Coalfields as on April 1, 2012 State Geological Resources of Coal ( in Million Tonnes) Proved Indicated Inferred Total Andhra Pradesh 9566.61 9553.91 3034.34 22154.86 Assam 0 2.79 0 2.79 Bihar 0 0 160 160 Chhattisgarh 13987.85 Jharkhand 40163.22 Madhya Pradesh Maharashtra Orissa Sikkim Uttar Pradesh West Bengal Total 32383.99 292004.51

Source: Ministry of coal



Content Deleted

4.8 TRENDS OF COAL PRODUCTION FROM OPENCAST & UNDERGROUND MINES

In last five years, in CIL, production from Open Cast (OC) mines witnessed a much higher CAGR of 7.2% while the production from Under Ground (UG) mines grew by just 2.1% due to lackluster

performance in the Conventional B&P technology. However, the UG segment performance was still better at CIL, as SCCL posted a negative 1.1% CAGR over the same period. Production from OC mines

for SCCL was almost at par with CIL, registering a CAGR of 6.5%.

Table 4.7: Trends of Production Of Raw Coal From Opencast & Underground Mines (in MT)

Company Technology 2007-08 2008-09 2009-10 2010-11 2011-12 (Projected)

CIL

OC Manual 0.32 0.35 0.35 0.30 0.30

Mechanised

Total OC 437.34

Total UG 12.26

TOTAL 40.61 44.55 45.01 46.00 47.01

Source: Ministry of Coal

Table 4.8: Details of Coal Blocks Allocated to Private Sector for IPPs/ CPPs - August 2013

S.No.

Name of the Company Date of Allotment

Coal Block allocated

Coal fields State Geological Reserves (In MT)

1 RPG Industries / CESC Ltd.

10.08.1993 Sarisatolli Raniganj West Bengal 140.47

2 Utkal Coal Ltd. (formerly ICCL)

29.05.1998 Utkal-C Talcher Orissa 208.77

28 (b) Adhunik Thermal Energy Ltd.

28.05.2009 Ganeshpur North Karanpura

Jharkhand


Content Deleted 4.11.10 COOPERATION WITH CHINA

9th meeting of the Indo-China Joint Working Group on Coal held during 9th – 11th February 2004 in India (New Delhi). Chinese delegation was led by Mr. Zhao Tiechui, Deputy Administrator of State of



Administration of Work Safety (SWAS) State Administration of Coal Mines Safety (SACCS), PR China and Indian delegation led by Dr. P.K.Mishra, Secretary (Coal) and the following bilateral

issues/projects were discussed in the meeting.

• BCCL -Moonidih project-Seam RXVI Top. • Jhanjra project of ECL. • Performance of existing Longwall faces at SECL.

Content Deleted Table 5.5: Details of De-allocated blocks

S. No. Name of the Block Block Allocation Date of Allocation

Date of De-allocation

1 Binani Cement Limited Datima 05.09.2008 27.04.2010 2 Murli Industries and Grace Industries Lohara (East) 27.06.2008 17.05.2010 3 Maharastra State Mining Corporation

Ltd. Agarzari 25.07.2007 28.06.2010

17 Damodar Valley Corporation Saharpur Jamarpani

25.07.2007 14.06.2011

Source: Ministry of Coal, Cerebral Business Research

5.6 RECENT DEVELOPMENTS

Aug 2013: Five states receive fresh allocation of coal blocks from the Coal ministry

The coal ministry has decided to allocate new coal blocks to five states - Madhya Pradesh,

Chhattisgarh, Orissa, Andhra Pradesh and Rajasthan. Coal from the blocks will be used for generating power. The coal ministry has said that the companies which will use the blocks will have to pay a

reserve price.

Chapter 7: Role of Imported Coal in Existing Scenario


6. DEMAND SUPPLY GAP ANALYSIS

6.1 INTRODUCTION

Despite India’s huge coal reserves, there is a growing concern on the increasing demand-supply gap; attributed primarily to the rapidly rising coal demand outstripping the production growth. Over the

last five years, the demand for coal has been growing at an average rate of 8–9 percent annually as compared to a 5–6 percent

Content Deleted 6.2.2 YEAR WISE GENERATION LOSS DUE TO COAL SHORTAGE

Generation loss on account of Current Stranded Capacity estimated is at INR 42,000 Crore (120

billion units @ INR 3.50 per unit); about 0.45% of GDP

Table 6.2: Generation loss due to Shortage of Coal for the year 2012-13 reported by Power Utilities

Sr. No. State Thermal Power Station Capacity (MW) Generation Loss (MU)

1. Haryana MAHATMA GANDHI-CLP 1320 1562.0 2. U.P. UNCHAHAR-NTPC 1050 18.0 3. DADRI(NCPP) -NTPC 1820 169.0

TOTAL 39812.5 11736 Source: Cerebral Business Research

Content Deleted



7. ROLE OF IMPORTED COAL IN EXISTING SCENARIO

7.1 INTRODUCTION

Presently, India ranks fourth in the coal import demand, being led by Japan. India accounts for about

10% of the world’s import coal demand. It is facing stiff competition from other Asian economies like

Japan, South Korea and China. Japan has continued to lead the import demand, China is fast catching up and its demand is estimated to rise at significantly high rate (CAGR 29%) between 2008 and 2013.

Table 7.2: Company Wise Import Statistics (MT)

Name of Utility Plant 2012-13 % Materialisation Target MT Achievement MT

Torrent 0.50 0.292 58% GSECL 1.50 0.359 24% CESC Reliance Energy (Dahanu) HPGCL APGENCO WBPDCL DVC UPRVUNL RVUNL MSPGCL MPGCL TNEB KPCL OPGCL NTPC Pathadih NTPC (JV) Indira Gandhi Reliance Energy Rosa Sterlite NTPC SAIL Power CO Tata (Maithon RB) Lanco Anpara CSEB Bajaj Hindustan TVNL Vedanta (Balco) NTPC (JV-Vallur) Adani Power (Tiroda) CLP (Mahatma Gandhi) Source: Cerebral Business Research



Table 7.3: Details of coal import during 2012-13 by NTPC

Thermal Power Station Capacity as on 31.03.2013 (MW)

Coal imported (in MT)

Average landed cost of imported coal (INR / Tonne)

Indicative* Increase in tariff (Rs. / kWh) due to blending of imported coal

Talcher Super 3000 2.218 5905 0.45 Farakka 2100 1.048 6578 0.19 Kahalgaon Ramagundam I&II Simhadri Dadri Rihand

Tanda Unchahar Vindhyachal Korba Sipat Total


Content Deleted 7.6 COUNTRY WISE IMPORT OF COAL

India's coal imports rose 29% to 135 million tonnes in the 2012/13 fiscal year, according to data from

government sources. Thermal coal imports for use in power plants jumped three-quarters to 97.23 million tonnes, while imports of coking coal, used in steel-making, rose a modest 1.2% to 32.2 million

tonnes.

Content Deleted

Chapter 8: Overseas Coal Acquisition


8. OVERSEAS COAL ACQUISITION

8.1 INTRODUCTION

To overcome coal shortage problem, most of the companies in India are looking to source coal from other countries either through fuel supply agreements or buying coal assets in coal rich countries.

Countries in which Indian companies have shown interest in recent past include Indonesia, South Africa, Columbia, Mongolia and Mozambique among others.

Content Deleted

8.2 INDONESIA

8.2.1 INTRODUCTION

Indonesia has witnessed a robust increase in coal production, coal exports and domestic sales of coal

since the early 1990s, when the coal mining sector was reopened for foreign investment. The

Indonesian coal industry is rather fragmented with only a few big producers and many small players that own coal mines and coal mine concessions

Content Deleted

Chapter 8: Overseas Coal Acquisition


8.6 COMPARISON MATRIX: TOP FOUR COAL PRODUCING NATIONS

Table 8.1: Comparison Matrix: Top Four Coal Producing Nations

Countries Australia Indonesia South Africa Mozambique

Coal Regions Queensland (overly exploited), New South Wales (overly exploited), Surat Basin & Galilee Basin (open for exploration)

Sumatra (overly exploited), Kalimantan (overly exploited), Papua, Java, Maluku & Sulawesi (partly exploited).

Cost of Mining

Coal Quality

Infrastructure

Tax Regime

Political Stability

Proximity to Indian Ports

Overall Assessment


Chapter 9: Coal Technologies


9. COAL TECHNOLOGIES

Clean Coal Technologies (CCTs) are defined as ‘technologies designed to enhance both the efficiency and the environmental acceptability of coal extraction, preparation and use’. These technologies

reduce emissions, reduce waste, and increase the amount of energy gained from each tonne of coal.

Content Deleted Table 9.1 CIL HEMM Population: 2007-12

Name of Equipment

2007 2008 2009 2010 2011 2012

Envisaged by MoC

Actual

Dragline 41 41 40 40 40 119 40

Shovel

Dumper

Dozer

Drill Source: Cerebral Business Research

Table 9.2: Norms and actual HEMM availability and utilization during Eleventh FYP

Equipment Availability (%) Utilization (%)

CMPDI Norms Actual CMPDI Norms Actual

Dragline 85 78-85

Shovel

Dumper

Dozer

Drill Source: Cerebral Business Research

9.1.2 UNDERGROUND MINING

In UG mining, the basic equipment for transporting are either haulage or conveyor belts. Worldwide, Longwall mining is used for UG mining due to higher outputs and productivity, safety related factors,

and to achieve improved recovery. The other method used is continuous mining.

Chapter 9: Coal Technologies


Content Deleted 9.3.2.1 FEW UPCOMING COAL PLANTS BASED ON SUPER CRITICAL TECHNOLOGY

Plant Company MW State Status Year

Ankulapatur power station phase 1

VSF Projects 350 Andhra Pradesh

Construction

Ankulapatur power station phase 2

VSF Projects 135 Andhra Pradesh

Planning

Pynampuram Thermal Power Project Units 1 and 2

Thermal Powertech Corporation

1320 Andhra Pradesh

Advanced development

2014

More than 60 plants listed


9.3.4 ADVANCED ULTRA SUPERCRITICAL TECHNOLOGY

The government’s National Mission for Technology, the Advanced Ultra Super Critical (AUSC)

project, which could cost well over Rs 6,000 crore, will be put up by a joint venture of BHEL, NTPC

Content Deleted

Chapter 10: Coal Prices


10. COAL PRICES

10.1 DOMESTIC COAL PRICES

CIL meets around 80 percent of coal requirement for power sector in India and around 55 percent of the country’s total energy requirement. Although its high-grade coal production is only around 5

percent of its total production, the overall impact of price would be huge on about 20 million tons (mt) of coal produced by the company.

Content Deleted Table 10.1: CIL thermal coal prices before and after revision (Rs/ton)

S.No. GCV Bands (Kcal/kg)

New Price after revision on May

28, 2013 for power sector, fertilizer &

defence sector

Old Price

Change (%)

New Price after revision on May 28

for sectors other than power sector,

fertilizer and defence

Old Price

Change (%)

1 7000+ * *

2 6700-7000 4,870 4,870 0 4,870 4870 0

3 6400-6700

4 6100-6400

5 5800-6100

6 5500-5800

7 5200-5500

8 4900-5200

9 4600-4900

10 4300-4600

11 4000-4300

12 3700-4000

13 3400-3700

14 3100-3400

15 2800-3100

16 2500-2800

17 2200-2800



Content Deleted

Source: CIL, Cerebral Business Research

10.3 INTERNATIONAL COAL PRICES TRENDS

Globally, coal prices have cooled off by 14-17 per cent over the last one year and prices are unlikely

to recover anytime soon as demand from China is down sharply.

Impact on tariff (INR / unit) Pre 2009 Post 2009 2013-14 2014-15 2013-14 2014-15

MW INR / unit

MW INR / unit

MW INR / unit

MW INR / unit

Pithead 13,200 0.08 13,200 0.07 13,750 0.08 19,360 0.07 Coastal Non-coastal non- pithead Sub total (i) Capacity commissioned in the year 1 (ii)

Total Capacity (iii) = (i) + (ii) Capacity considered for 2013-14 Capacity considered for 2014-15

Impact on tariff (INR / unit) 2013-14 2014-15 2013-14 2014-15 MW INR /

unit MW INR /

unit MW INR /

unit MW INR /

unit Pithead 13,200 0.08 13,200 0.10 13,750 0.08 19,360 0.10 Coastal Non-coastal non- pithead Sub total (i) Capacity commissioned in the year 1 (ii)

Total Capacity (iii) = (i) + (ii) Capacity considered for 2013-14 Capacity considered for 2014-15 Source: Cerebral Business Research

Issues:

In case the pre 2009 plants of State Governments are excluded from pooling because of the



opposition from State Governments, pooling could be among all post 2009 plants and non-State pre 2009 plants. However, this option would raise the following issues that need consideration:

Content Deleted

Chapter 11: Coal Washeries


11: COAL WASHERIES

11.1 INTRODUCTION

Despite the massive coal reserves in India, the demand continues to widen its gap from supply as coal production is progressing at a slow pace compared to fast rising coal demand. Due to geological

reasons, coal in India is characterized with high ash content and low calorific value. This further adds on to the coal supply crisis along with rising

Table 11.1: Details of existing Coal Washeries by CIL, (as of April 30, 2013)

SI. No. Washery Capacity ( MTY) Location Consumer Coking Coal

1 Dudga-II 2.00 Jharkhand Steel Plants 2 Bhojudih 1.70 West Bengal Steel Plants 3 Patherdih 1.60 Jharkhand Steel Plants

12 Nandan 1.20 MP Steel Plants (A) Coking Coal, CIL 20.10 NON-COKING COAL 1 Dugda-I 1.00 Jharkhand TPS 7 Bina 4.50 UP TPS (A) Non Coking Coal, CIL 20.20


Table 11.2: Details of existing Coal Washeries by Private Players, (as of April 30, 2013)

Washery Name Type Capacity ( MTY)

Location Consumer Player Name

DCOP Coking Coal 1.35 WB Steel Plants DPL

Jamadoba Coking Coal 1.72 Jharkhand Steel Plants TISCO Source: Cerebral Business Research

11.4 PERFORMANCE OF COAL WASHERIES IN OPERATION IN THE XI PLAN PERIOD

11.4.1 COKING COAL

Content Deleted

Chapter 11: Coal Washeries


Table 11.3: Details of Proposed coal washeries in India

Source: CIL Website

Content Deleted Table 11.7: Ranking of States most suitable for Coal Washing

Indices Rank

States Ash content

Total Naxalism

Total Land & Water

Total State flexibility

Total Infrastructure

Total Coal availability

Total Sum

1st Jharkhand

5 1.25 1 0.15

2nd Orissa 4 1 2 0.3 3rd Chhattis

garh

4th MP 5th WB Source: Cerebral Business Research

Sl.no. Subsidiary Washery Capacity(Mty) Type Scheme 1 ECL Chitra 2.5 Non-coking BOM 2 ECL Sonpurbazari 8.0 Non-coking BOM 3 BCCL Madhuband 5.0 Coking BOM 4 BCCL Patherdih 5.0 Coking BOM 5 BCCL 6 BCCL 7 BCCL 8 BCCL 9 CCL 10 CCL 11 CCL 12 CCL 13 CCL 14 SECL 15 SECL 16 MCL 17 MCL 18 MCL 19 MCL 20 WCL TOTAL 111.1

Chapter 12: Coal Scam Implications


12. COAL SCAM IMPLICATIONS

12.1 WHAT IS COALGATE SCAM

Between 1993 and 2011, the government of India gave away 206 coal blocks for free to government and private companies. Estimates suggest that only 41 out of the 206 blocks given away for free

were allocated before the end of 2003. This means that 165 blocks were allocated between 2004 and 2011.

The UPA government has been in power since May 2004. Hence, a major number of coal blocks were

given away free during the UPA rule. The Government Auditor or the Comptroller and Auditor General (CAG), in a recent report, estimated the losses due to the government’s policy of giving out

coal blocks for free to the tune of Rs1.86 lakh crore.

Content Deleted 12.2 BENEFITS TO THE PRIVATE PLAYERS

As per some estimates, a company saves 10 times from captive mining against buying coal from the

open market. For example to generate 1000MW of power, Rs. 250 crore / annum amount is needed

in case of captive coal and Rs 3240 crore per annum is required in-case coal is bought from the open market.

Content Deleted Table 12.1: Sector wise private players with captive blocks

Sector Companies with captive blocks No. of blocks allotted

Sponge & Pig Iron

Abhijeet Infrastructure, Usha Martin, Bhushan Steel, Rungta Mines, Neelanchal Iron, Bajrang Ispat, Electrosteel Castings, Domco Smokeless Fuel, Tata Sponge, Nalwa Sponge Iron, Topworth Urja & Metals

26

Power

Coal-to-liquid

Cement

Steel Source: CAG, Cerebral Business Research



12.2 BLOCKS ALLOCATION DETAILS AS HIGHLIGHTED BY CAG

STATE-WISE STATUS OF BLOCKS ALLOCATED AS HIGHLIGHTED BY CAG

As can be seen from the graphs, maximum number of blocks is allocated in Jharkhand (27) and Chhattisgarh (13).

Content Deleted

Figure 12.2: Year wise, state wise no. of blocks allocated, from 2005-2009

Source: CAG, Cerebral Business Research

12.3 ACTION TAKEN BY THE GOVERNMENT

Government has set up a review committee, naming Inter Ministerial Group (IMG), which has

shortlisted 58 companies whose coal licences are likely to be revoked for underperformance. The

group is scrutinising 29 blocks awarded to private firms out of the total 58 which were given show-cause notices for delays in developing mines.

Content Deleted

10

35

7

2

4

3

2

1

13

1

6

2

4

1

2005 2006 2007 2008 2009

State West Bengal MP Maharashtra Chhattisgarh Jharkhand Orissa

Average GR per block (MT) 77.5



Table 12.3: Blocks Recommended For Deduction of Bank Guarantee

S.NO Company Name State Block Name Date of Allotment

Sector Extractable Reserve (MT)

1 Usha Martin Ltd. Jharkhand Lohari 24-Aug-05 Steel 9.0

14 Monnet Ispat & Energy *

Orissa Utkal B2 Block


Most of the blocks recommended for deduction of bank guarantee are in the sponge iron category (7 blocks), followed by four blocks in the Power sector.

Content Deleted Table 12.4: Blocks Recommended for De-allocation by IMG

S NO Company Name State Block Name Date of Allotment

Sector Extractable Reserve (MT)

1 Bhusan Steel & Strips Ltd. & Others

Orissa New Patrapara 13-Jan-06 Sponge Iron 316.1

13 Maharashtra Seamless, Dhariwal Infrastructure and Kesoram Industries

Maharashtra


The state of Jharkhand has the maximum number of blocks (5 blocks) been recommended by IMG for de-allocation, closely followed by Chhattisgarh with 3 blocks. The rest of the states including

Maharashtra, Madhya Pradesh, West Bengal and Orissa have either one or two de-allocation recommendations each.

Content Deleted 12.4 IMPACT OF DEALLOCATION

There is unlikely to be any kind of immediate impact on the economy. However, some impact in the

mid-term is quite likely. Many power projects, which are dependent on captive coal blocks from the



allocation, are likely to get delayed without assured supply of coal. If supply of electricity is affected, there will be a cascading effect across the economy

Content Deleted

Chapter 13: Other Recent Developments


13. OTHER RECENT DEVELOPMENTS

13.1 COMPANY RELATED

Hindalco to buy coal from other sources for aluminium project in Odisha (Oct 2013)

Business Standard reported that Hindalco will have to buy coal from other sources at a very high

cost for its INR 17,000 crore aluminium project in Odisha, as its Talabira mine is yet to receive Stage-II clearances from the Union environment ministry.

Content Deleted Indian coal mining scam - CBI recovers INR 25 crore cash from Hindalco (Oct 2013)

CBI said that a day after it lodged an FIR against Hindalco and its boss Mr Kumar Mangalam Birla, it had recovered INR 25 crore in cash from the corporate office of the aluminum major in the city.

Content Deleted Jindal to takes over ownership of Gujarat NRE Coking Coal (Oct 2013)

Jindal Steel will take over ownership of Gujarat NRE Coking Coal after a successful shareholder vote

recently.

Content Deleted

CIL production hit due to recent Cyclone (Oct 2013)

PTI reported that state owned CIL has suffered a production loss of about 1.2 million tonne in the past 3 days on account of Cyclone Phailin which has affected the key coal producing states of

Odhisha, Jharkhand and West Bengal.

Content Deleted

Chapter 14: Company Profiles


CHAPTER 14: COMPANY PROFILES

14.1 COAL INDIA LTD

14.1.1 COMPANY OVERVIEW

• Coal India Limited (CIL) as an organized state owned coal mining corporate came into being in November 1975 with the government taking over private coal mines.

• With a production of 79 Million Tonnes (MTs) at the year of its inception CIL today is the single largest coal producer in the world.

• Operating through 81 mining areas CIL is an apex body with 7 wholly owned coal producing subsidiaries and 1 mine planning and Consultancy Company spread over 8 provincial states of India.

Content Deleted 14.1.2 STRATEGIC VISION

The strategic vision of CIL is to place itself on a path of accelerated growth with enhancement in

productivity competitiveness

Content Deleted

14.1.3 SUBSIDIARIES OF COAL INDIA LTD:

1. Eastern Coalfields Limited (ECL), Sanctoria, West Bengal 2. Bharat Coking Coal Limited (BCCL), Dhanbad, Jharkhand 3. Central Coalfields Limited (CCL), Ranchi, Jharkhand

Content Deleted Existing Material Agreements/Joint Ventures/MOUs

• Agreement between CIL and Indian Oil Corporation Limited, IBP Division ("IOCL-IBP") for the supply of bulk loading explosives to our Subsidiaries.

Content Deleted Products

• Coking Coal • Cokin Coal



Content Deleted Services:

Content Deleted 14.1.4 CIL PRODUCTION TRENDS

CIL accounted for about 81% of the total coal produced in the country during fiscal 2013. There

appears to be no shortage of market for the mineral, if it can be produced at a reasonable cost on a sustainable basis.

Figure14. 1: CIL Raw Coal Production

Source: CIL Annual Reports

Off Take of Raw Coal

Off-take of raw coal continued to maintain its upward trend and reached 465.18 million tonnes for fiscal ended March 13, surpassing previous highest of 433.08 million tonnes achieved during the last

Content Deleted

0

50

100

150

200

250

300

350

400

450

500

Production of Raw Coal During 2003-04 to 2012-13



Figure 14.2: Off take of Raw Coal from CIL

Content Deleted Source: CIL Annual Reports

Content Deleted 14.1.5 CIL FINANCIAL HIGHLIGHTS

CIL is one of the largest profit making and tax & dividend paying enterprises in India.Aggregate pre-

tax profits for CIL and its subsidiaries increased by 17.42% from Rs. 21,272.66 crores in 2011-12 to Rs. 24,979.04crores for 2012-13.

Figure 14.3: Profit after Tax & Net worth of CIL

Content Deleted Source: CIL Annual Report

14.1.5 SWOT ANALYSIS OF COAL INDIA LTD.

STRENGTH WEAKNESS Maharatna Status Government Intervention

OPPURTUNITIES THREAT Operational Risks

Details of Strengths

Maharatna Status: The Company is the single largest coal producing company in the world. It was awarded a Maharatna Status on 11th Apil 2011, becoming the fifth company to be awarded the

status. The Maharatna

Content Deleted Details of Weakness



Government Intervention

Excessive government intervention in the operations of the company may be cause of concern for the shareholders.

Content Deleted Details of opportunities

Increasing Coal Demand

Rising coal demand provides an opportunity for the company to expand its operations. Coal is used as a raw material in the production of steel.

Content Deleted

14.1.6 RECENT DEVELOPMENTS CIL allots Rs 4000cr for overseas blocks Mon Aug 12, 2013

Coal India has made a provision of Rs 4,000 crore as capital expenditure this fiscal to develop blocks

in Mozambique and acquire overseas assets. “The capital expenditure for 2013-14 has been envisaged at Rs 5,000 crore plus an additional ad hoc provision of Rs 4,000 crore for the acquisition

of coal assets abroad and development of coal block in Mozambique,”

Content Deleted



ANNEXURE

Annexure 4.1: Details of Geological Reserves (Resource in million tonne)

State/ Coalfield/ Type of coal

Depth Proved Indicated Inferred (Exploration)

Inferred (Mapping)

Total

GONDWANA COALFIELDS WEST BENGAL

1. RANIGANJ

MEDIUM COKING 0-300 194.70 1.60 0.00

196.30

300-600 15.30 16.90 0.00

32.20 Total

SEMI-COKING

0-300

300-600

600-1200

Total

High Sulphur 0-300

TOTAL FOR DGM REPORT

293.47 293.47

TOTAL FOR NAGALAND 8.76 0.00 8.60 298.05 315.41

Total for Gondwana Coalfields

117551.00

Total for Tertiary Coalfields

593.81 99.34 49.57 749.92 1492.64

GRAND TOTAL 118144.81 142168.85 32433.57 749.92 293497.15 Source: Cerebral Business Research

Note: Totals may not match since the contents are deleted

S. No. Features Pakri-Barwadih Chatti-

Barwadih Kerandari(*)

Features Date of allotment 11.10.04 25.01.06 25.01.06 Mode of allotment Government

Dispensation Captive Captive

Geo. Reserves (MT) 1436 194 285 Mineable Res. (MT) (OC) 503 151.08 142.01 Est Capacity (MTPA) 15 7 6 End-use Project Shortfall of:

Lara (4000 MW) Darlipalli (3200 MW)

Barh St.-ll (1320 MW) Tanda Expn, St-ll (1320 MW)

H Coal Production September 2013 February 2015 August 2015

(*) Chatti-Bariatu, Kerandari & Chatti-Bariatu(S) coal mining blocks were de-allocated by Ministry of Coal on June 14, 2011. Ministry of Coal has withdrawn the de-allocation and restored these coal blocks to NTPC on January 23, 2013. Source: Cerebral Business Research

12.1 State wise status of blocks allotted (under COALGATE SCAM)

Chhattisgarh



Content Deleted Source: Cerebral Business Research State wise status of blocks allotted- Jharkhand

Content Deleted State wise status of blocks allotted- Orissa

Content Deleted State wise status of blocks allotted- Others

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