MULTIPLE CHOICE QUESTIONS FOR NON EXECUTIVES TO EXECUTIVE EXAMINATION IN CIL

COAL SECTOR IN INDIA




BY:
SRI RANJIT MOHAPATRA
Sr. Manager (Mining)
GVTC JA.










ABSTRACT:


Coal is a mineral resource abundantly available in India mostly in shallow depths. Geological mine conditions and large scale manpower are two other factors favoring large scale coal mining in India. Coal production in India is one growing sector which helps our Electricity generation which in turn gives strong backing to Industrialization and Urbanization.
In country’s Five year plans thrust is given to coal, steel ,power, and railway sectors which are core sectors and depends upon one another.
In employment generation Indian coal sector is one very important Industry creating direct and indirect employment to millions of educated and uneducated countrymen every year.
Coal based power plants needs less Gestation period and one of most reliable in terms of continuous availability of coal as raw material and running of thermal power plants.
Coal mining is a low Investment and high profit Business for Government.
In India we are fortunate that we have been inherited with Indian coal mining methods as opencast and underground suited to our geological conditions.
Also many hundreds of ancillary Industries are depending on Coal Industry where employment is generated.
Coal will continue to dominant in Indian Energy sector as cheapest available source. Although due to switch over to non-pollutant energy sources in India is not feasible in near future to be used in large scale Coal is still the king.
Solar, Hydro electric, geothermal, Nuclear, Biomass ,Tidal energy sources are to take the place of Coal ,that may take many years .India Government is working in Research and Development for Renewable energy to be tapped in future ,it is very costly now.
India has laid down resources for Coal,steel and power Industries which are working at tandem inter dependent with each other.

















SUMMARY:
India is a developing country, with large population where 10% are deprived of electricity. Electricity generation is mostly dependent on coal which is abundantly available in our country. Out of the available choices of energy sources the cheapest energy source in India is coal which also gives direct and indirect employment to a large population. In coming days when there will be gap in demand-supply of coal, India will go for import. But, to maintain the balance our government is taking all steps for increasing indigenous coal production. Coal is also used in making of steel, cement and a variety of other products, some of these uses will probably continue for a longer period of time. Private participation through FDI (Foreign Direct Investment) under automatic route is allowed for coal by enactment in Parliament. This will solve our problem of not importing large quantity of coal for which our foreign exchange will be exhausted. Coal demand outstrips domestic supply and will continue to do so, though the share of import is expected to decline, according to rating agency CRISIL. Coal India is planning to produce 1 billion ton in five years. NITI Agog has given targets to Coal India Limited and Singareni Coal Company Limited to match the indigenous demand. Our government’s energy policy to provide power to each house will be successful by the coal share in electricity production. Other energy sources are Bio-fuels, Nuclear power, Hydro electricity, Wind power, Solar energy, Hydrogen energy are very costly and our technology, research and development are not succeeding to provide cheaper energy sources than coal. Improved coal mining in India to give good quality coal, continuous supply to power plants, other ways of coal to energy conversion like coal gasification are now possible in India. Regulatory hurdles like Environmental clearance, Land acquisition, Safety clearances are now not so rigidly dealt with. Government is making liberal policies for yearly clearance of mega projects. Newer mining technology, mechanization, modernization, large scale use of computers and office automations, more trained and skilled manpower are the other advantages by which incremental coal productions will be achieved with higher productivity.


Internationally reputed Coal firms such as BHP, Rio Tinto, China Shenhua Energy, Glencore Xstrata, Vale, Barrick Gold, Newmont mining may come to India for coal mining directly or indirectly through other private companies like Adani Power, Reliance Power, Jindal Steel and Power etc. The government of India has liberalized the policy for making entry of 100% FDI ( Foreign Direct Investment) in India.









INTRODUCTION:
Electricity is one of the most important blessings that science has given to mankind. It has also become a part of modern life and one cannot think of the world without it. The use of electricity in day-to-day life includes electric trains, battery-cars, TV, radio, cinema, computers, robots, x-rays, ECG, AC, electric stoves etc.
In India, more than 65% of electricity consumed is generated by Thermal Power Plants using Coal, 22% by Hydro-Electric Power Plants, 3% by Nuclear Power and 10% from Other alternative sources like Solar, Biomass etc.

India being the 2 nd most populous country in the world with 1.3 billion people in 2017, and the population is projected to increase to 1.5 billion by 2030, energy usage in India is expected to rise for an improved quality of life.


65% 22% 3% 10% Sources of Electricity Coal Hydro-electric Nuclear Energy Other Sources (Solar, Biomass)
Indian economy is one of the fastest growing major economies of the world. Over the last 7 years the GDP (Gross Domestic Product) rate has averaged 7.3% and the projected to be the order of 7.9% over coming 5 years.
India is the 3 rd largest energy consumer in the world in absolute terms, but ranks 47 th in the world in terms of per capita energy consumption. The current per capita commercial primary energy consumption in India is about 35kgoe/year which is well below that of developed countries. India’s low level of development and requirement to grow faster is evident from the fact that the per capita energy consumption is 62% lower than the world average.
Coal is the most important and abundant fossil fuel in India. Coal mining and Coal-based electricity generation are two of the core industries that contribute about 10% to India’s IIP (Index of Industrial Production). Further, Aluminum industry, Sponge-Iron industry, Logistics industry, Steel industry, Cement industry etc. largely depend on India’s Coal production. Besides playing a crucial role in energy sector, it also provides employment to around 5,00,000 direct jobs and many indirect employment.
The provision of secure, affordable and sustainable energy is one of the major challenges for the first growing Economy of India.


SETTING OF THE CONTEXT:
COAL RESERVES:

• · As a result of exploration carried out up to 1200 m, a cumulative total of 319.04 billion tons of Geological Resources of Coal have so far been estimated in the country till April 2018.

• · Top 5 states in terms of total Coal Reserves .

STATE	COAL RESERVES (in billion metric tones)
JHARKHAND	83.15
ODISHA	79.30
CHATTISGARH	57.21
WEST BENGAL	31.67
MADHYA PRADESH	27.99
TELANGANA	21.70
MAHARASHTRA	12.30
OTHERS	5.5
TOTAL	319.04

• · The distribution of India’s coal reserves creates a supply challenge for India.

INDIGENOUS PRODUCTION OF COAL IN INDIA:

• · Coal mining in India was started long back, around 1770 in Raniganj Coal Fields. Subsequently, coal mining was done by Indian Private Sector players. Then, by NCDC (National Coal Development Corporation) Coal mining was nationalized and Coal India Ltd was formed as a public sector unit.
• · India never witnessed demand-supply gap until 1991.
• · Soon after came the liberalization of India with a clear impact of economic growth.
• · In 1993, to focus on the increasing energy demand, the government decided to allocate coalmines to various players for captive consumption.
• · In the mean time, the power sector reforms took place in 2003 resulting significant growth in power sector.
• · Growing power sector started demanding higher supply of coal which couldn’t be fulfilled by Coal India, SCCL (Singareni Coal Company Limited) etc., leading to which higher demand-supply gap started converting to imports.
• · Demand-Supply Gap by 2012 widened to 18-20% of India’s Coal demand.
• · Regulatory framework of Government of India had further made Coal mining difficult by Forest Rights Act, LARR (Land Acquisition Rehabilitation and Resettlement) Act, Environment Act etc. and then came the CAG (Comptroller and Auditor General of India) report followed by Supreme Court verdict in 2014 that over turned the allocation of all Coal mines allocated after 1991 leading to stoppage of coal mining by captive power plants allocated coal blocks.
• · India is the 2 nd largest producer of coal in the world after China. The production of coal was 675.40 million metric tonnes in 2017-2018, a growth of 2.66% over the previous year.
• · India’s thermal coal production increased more than six-fold between 1978-79 and 2009-2010, in response to rapid growth in coal consumption in the electricity generation sector.
• · The production of coal remains substantially lower than the consumption, with the development of new greenfield coal mines in India constrained by ongoing challenges with land acquisition, approval processes and inadequate transport infrastructure.
• · The Indian government will need to continue to pursue reforms so that production can keep up with growing power and industrial demand. However, the complex regulatory and institutional settings for India’s electricity and coal industries remain a barrier to implementing these reforms.

• · Coal production is done by public sector units like Coal India Limited (CIL), Singareni Coal Company Limited (SCCL), captive coal blocks and others.
• · Coal India is producing more than 80% of India’s total coal production.
• · Coal India is divided into subsidiary companies of Mahanadi Coalfields Limited (MCL), South Eastern Coalfields Limited (SECL), Western Coalfields Limited (WCL), Northern Coalfields Limited (NCL), Eastern Coalfield Limited (ECL), Bharat Coking Coal Limited (BCCL), Central Coalfields Limited (CCL), North Eastern Coalfields Limited (NECL).
• · The companies are made on state-wise coal production.
• · Three major Coalfields like: Talcher Coalfields, Korba Coalfields and Singrauli Coalfields producing more than half of the coal production of the country.

NEED FOR COAL IMPORT:

• · There is growing need of Coal at a higher rate than Our domestic coal production.
• · There is a gradual increase in Import needs of Coal in India.
• · Presently Coal production of 80% and more is done by Coal India which is a Public sector Unit of Government of India.
• · Singareni Coal company is Telangana Based PSU is also coal producing company.

0 100 200 300 400 500 600 700 800 900 1000 1978-19791988-19891998-19992008-20092018-2019 MILLION TONNES YEAR India's thermal coal production and consumption PRODUCTION CONSUMPTION GAP



IMPORT SOURCES:

• · Indonesia has been the primary source of thermal coal imports for India, driven by two key factors. The similar properties of Indonesian and Indian coal makes it easy to
• · substitute Indonesian coal into India’s coal-fired power generation fleet, which has largely been designed for low-energy, high-ash coal. The relatively low cost of Indonesian coal is also appealing to Indian buyers, who are relatively price sensitive.

LITERATURE REVIEW:
CLASSIFICATION OF COAL:

• · Coal is originated from organic matter wood. When large tracts of forests are buried under sediments, wood is burnt and decomposed due to heat from below and pressure from above. The phenomenon makes coal but takes centuries to complete.
• · Classification of coal can be done on the basis of carbon content and time period.
• · On the basis of carbon content, it can be classified into following 3 types:
• 1. Anthracite: It is the best quality of coal with highest calorific value and carries 80 to 95% carbon content. It ignites slowly with a blue flame and found in small quantities in Jammu and Kashmir.
• 2. Bituminous: It has a low level of moisture content with 60 to 80% of carbon content and has a high calorific value. Jharkhand, West Bengal, Odisha, Chhattisgarh and Madhya Pradesh have deposits of Bituminous.
• 3. Lignite: It carries 40 to 55% carbon content and is often brown in colour with high moisture content thus, gives smoke when burnt. Rajasthan, Lakhimpur and Tamil Nadu has deposits of Lignite.

62% 20% 8% 4% 0% 10% 20% 30% 40% 50% 60% 70% Indonesia South Africa US Australia % OF COAL IMPORT COUNTRIES IMPORTS OF THERMAL COAL FROM:

• 4. Peat: It is the first stage of transformation from wood to coal with low calorific value and less than 40% carbon content.

HISTORY OF COAL MINING IN INDIA:

• · India has a long history of commercial coal mining covering nearly 220 years starting from 1774 by M/s Sumner and Heatly of East India Company in the Raniganj Coalfield along the Western bank of river Damodar.
• · However, for about a century the growth of Indian coal mining remained sluggish for want of demand but the introduction of steam locomotives in 1853 gave a fillip to it.
• · The production got a sudden boost from the First World War but went through a slump in the early thirties. The production reached a level of 29 mts. by 1942 and 30 mts. By 1946.
• · With the advent of Independence, the country embarked upon the 5-year development plans. At the beginning of the 1 st plan, annual production went up to 33mts.
• · During the 1 st plan period itself, the need for increasing coal production efficiently by systematic and scientific development of the coal industry was feeling felt.
• · Setting up of the Nation Coal Development Corporation (NCDC), a Government of India undertaking in 1956 with the collieries owned by the railways as its nucleus was the first major step towards planned development of Indian Coal Industry.
• · Along with the Singareni Collieries Company Ltd. (SCCL) which was already in operation since 1945 and which became a Government company under the control of Government of Andhra Pradesh in 1956, India thus had two Government coal companies in the fifties.
• · SCCL is now a joint undertaking of Government of Andhra Pradesh and Government of India sharing its equity in 51:49 ratio.

NATIONALISATION OF COALMINES:

• · The nationalization was done in two phases, the first with the coking coal mines in 1971-72 and then with the non-coking coal mines in 1973.
• · In October,1971, Coking Coal Mines (Emergency Provisions) Act,1971 provided for taking over in public interest of the management of coking coal mines and coke oven plants pending nationalization
• · This was followed by the Coking Coal Mines (Nationalisation) Act,1972 under which the coking coal mines and coal oven plants other than those with the Tata Iron & Steel Company Limited and Indian Iron & Steel Company Limited, were nationalized on from May 1972 and brought under Bharat Coking Coal Limited (BCCL), a new Central Government Undertaking.
• · Another enactment, namely the Coal Mines (Taking Over Of Management) Act,1973, extended the right of the Government of India to take over the management of the coking and non-coking coal mines in seven states including the coking coal mines taken over in 1971.
• · This was followed by the nationalisation of all these mines in May 1973 with the enactment of the coal mines (Nationalisation) Act, 1973 which now is the piece of Central legislation determining the eligibility of coal mining in India.

• · After nationalisation of the coal industry in India, India never witnessed demand-supply gap until 1991.
• · After liberalization reforms in 1993, to focus on the increasing energy demand, government decided to allocate coal mines to various players for captive consumption.
• · The power sector reforms of 2003, resulting in significant growth in power sector.
• · Increasing demand of Coal by growing power sector couldn’t be fulfilled by the state run CIL in the meantime, leading to higher demand-supply gap. This resulted into higher demands of imports.
• · By 2012, this demand-supply gap widened to near 20%. Moreover, the LARR Act, Forest Rights Act etc., also challenged the further expansion of coal mines.
• · The CAG report followed by the Supreme Court verdict in 2014 resulted into cancellation of allocation near all coal mines allocated after 1993.
• · GOI enables allocation of coal mines through auctions by enacting the Coal Mines (Special Provisions) Act,2015.
• · In February 2018, CCEA permitted entry of private firms in commercial coal mining in the country.

WHAT TROUBLES COAL SECTOR IN INDIA?

• · India has to import near 213 million tons coal and some Indian companies have also acquired coal mines overseas to ensure continuous supply. The import dependency for good quality coal is neither good for India’s energy requirement nor for its fiscal health.

Following reasons can be listed for Coal Sector abysmal condition:

• · Delayed environment and forest clearances: Environment ministry in past has classified ecological sensitive areas in ‘Go and No Go areas’ and there was total prohibition on mining in no go areas.
• · Further there are other clearances required from State and Central Governments.
• · Land Acquisition problems.
• · Lack of adequate technology.
• · Allocation process was arbitrary, discretionary and non-transparent.
• · There was no consideration of merit, no price discovery mechanism for national resources.
• · Till now, the PSU, Coal India was the only commercial miner in the country for more than four decades which has shown monopolistic tendencies in the sector. Monopoly in mining sector was incapable of meeting domestic demands.
• · Low productivity of Coal India is still a concern.
• · Coal plants have higher operation and maintenance costs because of strict regulatory issues.
• · India’s power regulators are not regularly updating prices to accommodate increases in operational costs due to regulation.
• · State pollution control boards are ineffective at monitoring or enforcing compliance.

• · Expansion in power generation in India has been largely based on state financing i.e. many coal power plants in India are constructed through massive debt financing from state-owned banks.
• · It shows that international investment in coal generation assets in India is very less.

GOVERNMENT INITIATIVES:

• · In April 2018, The Ministry of Coal has launched UTTAM (Unlocking Transparency by Third Party Assessment of Mined Coal) Application for coal quality monitoring.

This app aims to ensure transparency and efficiency in coal quality monitoring process and bring coal governance closer to people.

• · The Cabinet Committee on Economic Affairs (CCEA) has approved a new coal linkage policy to ensure adequate supply of the fuel to power plants through reverse auction. The new policy will help in ensuring fuel supplies to the power plants in an organized manner.
• · Ministry of Coal has developed Online Coal Clearance System to provide a single window access to its investors to submit online applications for all the permissions/ clearances and approvals granted by Ministry of Coal.
• · Coal Allocation Monitoring System is developed to monitor the allocation of coal by CIL to States, States to SNA and SNA to such consumers in a transparent manner.
• · Opening up of commercial coal mining for Indian and foreign companies in the private sector.
• · The CCEA approved the methodology for auction of coal mines/ blocks for sale of the commodity on 20 February 2018. The move has been defined as the most ambitious reform of the sector since nationalisation in 1973.

The auction will be done on an online transparent platform. The bid parameter will be the price offer in Rupees/ Tonne, which will be paid to the State government on the actual production of coal.
This reform is expected to bring efficacy into the coal sector by moving from an era of monopoly to competition. It will increase competitiveness and allow the use of best possible technology in the sector.


CONCEPTUAL FRAMEWORK:

• · Indian mining technology has witnessed various revolutionary changes in the coal sector after nationalization.
• · Backed-up as it is by application of scientific planning and advanced technology systems with appropriate mechanization, it has incorporated exploration, coal winning and transport, ventilation, roof support, material handling and communication etc.
• · Indian mining method is broadly divided into two types:
• 1. Open cast mining
• 2. Underground mining
• · But the gradual trend is towards the open cast mining.
• · Major open cast mining projects operating in India are: Rajmahal, Bina, Jayant, Dudhichua, Khadia, Amlohria, Nigahi, Gevra, Kusmunda, Dipka, Manikpur, Bharatpur, Bhubaneswari, Lakhanpur, Lingaraj, Pipparwar, Rajrappa etc.

• · Major underground mining projects operating in India are Moonidih, Seetalpur, Patherkeda, Nandira, Dera, Handidhua, Charcaha, Dhemomain etc.
• · In the underground bore and pillar was the old method of mining and were gradually mechanized with continuous miner, LHD, SDL and belt conveyor etc.
• · Open cast mining were gradually mechanized with surface minor, dragline, high capacity shovel, dumper, drills etc.
• · To improve the production and productivity, outsourcing of opencast operations were gradually introduced.
• · Many contractual firms are given operations of over burden removal, coal transportation etc.
• · Many contractual firms are given operations of over burden removal, coal transportation etc.
• · In underground long wall mining were introduced in Seetalpur and Dhemomain collieries in the Eastern Coalfields Limited (ECL) and Patharkhera in the Western Coalfields Limited (WCL)and in Godavari Khani No.7 incline in Singareni Collieries Company Limited (SCCL).
• · Indian mining technology and mining methods matched to Indian Geological conditions could increase the production of coal but in last decade Indian technology was not efficient enough to match the rapid demand of coal in the Indian market resulting in increase in Coal imports. The coal import is now a headache for the government.
• · In International scenario, coal mining is gradually avoided due to pollution, climate change etc.
• · In International forum, like Paris agreement it was mutually agreed to switch over to renewable and green energy sources.
• · In Indian context, thermal power being cheap, abundant availability of coal when compared with renewable sources left us with no choice but to stick to coal energy.
• · But due to international pressure the research and development in green energy, renewable energy, clean coal technology are options for India.
• · In spite of that exploitation of more coal with quality and efficiency is now being thought by the Government.
• · Recent enactment to allow 100% entry of FDI (Foreign Direct Investment) in coal sector was framed by the Government which will generate huge employment opportunities, borrowing of new technology and cheap exploitation of coal with market competition is expected.

SUGGESTIONS:

• · There is a need for increasing production and competition by leveraging higher producing mines to enable more world-scale operations.
• · Government should revisit coal grades pricing mechanism from grades based on coal mined to grades based on coal desired for end use.
• · With a competitive coal mining sector in the country, the ability to raise competitive finance should also improve.

• · Coal mining needs to be facilitated with offtake routes for bulk transportation over long distances as with railways projects delayed for long periods of time it is imperative to look at alternatives.
• · Risk is the biggest challenge in the sector and risk management needs new instruments, contracting and incentives.
• · Creative and targeted financing should be brought in to address the power sector’s burgeoning problems.
• · As India’s coal is high in ash content, coal beneficiation (process by which the quality of raw coal is improved by either reducing the extraneous matter that gets extracted along with the mined coal or reducing the associated ash or both) should be done to reduce the ash content and improve its grade.
• · The arrival of private players in the coal mining practices can bring a lot of better things into the picture.
• · In the long term, India needs to look at coal to gas i.e. more cleaner energy sources.
• · Clean coal as an idea has huge potential in India because of the age and inefficiency of some of our plants.

With government’s efforts to push renewable energy due to international conventions on climate change, increase in carbon cess and other initiatives for lesser use of coal, there is a need for ‘Vision 2030 for the coal sector’, which takes into account the environmental factors such as reduction of carbon footprint, abatement of global warming.

CONCLUSION:

• · Coal is king in India-and will likely remain so.
• · In conversations about avoiding the worst impacts of climate change removing coal from the world’s energy system is always at the top of the list of the solutions.
• · In United States, 40% decline in coal fired generation over the last decade was done.
• · However, coal is still king in other parts of the world.
• · India’s ambitious renewable energy goals have received a lot of international attention but coal still provides more than half of the India’s commercial primary energy and is dominant fuel for power generation.
• · India’s energy policy currently focuses on bringing affordable electricity to all houses.
• · India’s per capita electricity consumption is only one third of the world average and millions of homes still lack electricity connection.
• · The environment is important but local air pollution rather than climate change is the prime concern.
• · Despite growing coal consumption, India is on the track to meet its nationally determined contribution under the Paris agreement.

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