POLICY CHANGES REQUIRED FOR INCREASED COAL PRODUCTION BY V K ARORA

1. POLICY CHANGES REQUIRED FOR INCREASED COAL PRODUCTION BYV K ARORA Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

2. While coal is a central subject and allocation of coal blocks is done by the Centre but the mining lease is given by the State. No significant progress leading upto the mining could be made by the allottee coal company if the Central State relations are not being used to help the allottee to overcome the various problems. While coal is a Centre subject, land and rehabilitation are governed by the State and unless there is sufficient cooperation by the government, things cannot move in the right direction. Similarly, in regard to the clearance for the environment, pollution, forest etc. the State and the Central government have to work together to enable the block holder to produce the kind of coal needed for the country. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

3. Similarly, in regard to the clearance for the environment, pollution, forest etc. the State and the Central government have to work together to enable the block holder to produce the kind of coal needed for the country. Total number of captive blocks allotted so far are 289 blocks having reserves of 43 billion M.T. Compare this with CIL which has reserves of 49 billion M.T. and it meets 65% of the demand of the thermal power plants. In the last 4 years, no new linkages have been given, no allocation of coal blocks were given and coal imports are rising. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

4. In 2012-13, India produced 567 MMT of coal and imported 137 MMT. In 2016-17, domestic production for the public sector is expected to be 695 MMT and imports would be 185 MMT. As per the office of the Coal Controller, captive coal blocks given to the private companies could have brought in 700MMT but all the blocks are mired in corruption, irregularities and delays. The situation and the solutions are all complex. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

5. At present a kind of witch hunting is going on in the country in respect of allocation of coal blocks. It is a fact that the policy for allocation of these blocks has not been transparent nor along well established guidelines whereby applicants could have gone through a fitness test to determine the best possible candidate. The criteria has been vague, in many cases on first come first serve basis and are subject to exploitation, not only by applicants but also by the deciding officers. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

6. On hindsight, we could say that the guidelines and the procedure should have been more explicit. Perhaps auctioning of the coal blocks would have reduced all chances of manipulation. Having said that, it does not mean that everything about the allocation was wrong. In democracy, people have a right to present their case and if rejected once, have a right to re-present their case. A re-consideration may be ordered by the highest authority in the country if it is felt that the interest of the State would be better served by the re-consideration. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

7. Whether it is politician or a bureaucrat, they seem to be too scared to take any decision or clear any file because they are afraid that at any later time, post his retirement, some vested group may allege corruption or wrong doing behind the clearance. This has resulted in a complete halt to the decision making process. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

8. The trouble is where the policy is not clear and transparent and leaves some scope for some kind of a discretion to be adopted by the deciding officer, there is every likelihood of the discretion being exercised at the cost of some favour. This can only be avoided if the policy had no ambiguity. In hindsight, we can now say, that had there been a policy of auction of coal blocks in place, there would not have been any scope of wrong doing. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

9. Hence the debate as to whether decisions were taken under some consideration or not would continue to bother the public at large. Having landed ourselves in such a difficult situation what is way out – These blocks were capable of producing 400-700 MMT of coal but have yet to go off the ground because of policies. How do we get out of it ? on the other hand, the coal shortage is increasing day by day and its a pity that we have to continue importing coal at a great cost and an expense of foreign exchange. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

10. What are the options available with us today – • We continue to accept the allocation of 298 blocks as ‘fait accompli’ and provide assistance to these block holders so that they are able to start production. • Nationalise all the allotted coal blocks and let CIL, its subsidiaries or NMDC or NLC mine all the blocks. This means going back by another 10 years as the track record of these PSUs have not been that encouraging. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

11. India should auction 5 large coal fields which would attract world class coal companies like BHP Billiton, Rio Tinto, Pea Body and these companies are allowed to sell the coal commercially in competition with CIL. This will bring in very huge investment that are needed alongwith latest technologies. Most of the blocks with coal at 150-600m depth require advance technologies for underground mining. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

12. Before we do so, as part of the current law, only CIL, SCCL and NLC can market coal directly. That is why the route of captive mining was adopted. If you have to sell this coal in the market, you have tp change the law for which you need the votes in the Parliament. In this era of coalition government with multi party system, the government neither have nor shall have the strength or the inclination to bring in the change, unless one party has sufficient majority and good cause to bring in the change. Not likely to happen in the present situation. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

13. Various reasons resulting in delay or non start of production in 148 blocks are :- • Delay in Forestry clearance • Delay in Environment clearance • Delay in Land acquisition • Problems of rehabilitation of land oustees and • Project Affected People (PAP) • Adverse Geo-mining conditions • Law & Order problems (including Naxalism) Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

14. Trend of Coal Production from Captive Blocks in XI Plan Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

15. To understand the reasons, let us go through the stages of development of a coal mine :- Stages in Development of Coal Mine Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

16. Detailed Exploration – • As per the guidelines for detailed exploration, boreholes • to be drilled in 400 meters interval. • In case of detailed exploration in forest area, at present • 20 nos. of boreholes allowed in 10 Sq. Km. area. • For meaningful Geological Report, at least about 8 nos. • of boreholes per Sq. Km. area required. • Local resistance during exploration - State support is of • utmost importance. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

17. Main Bottlenecks in Captive Mine Development – • Huge time being taken in obtaining of - Forest Clearance - Environment Clearance • Land Acquisition – problematic • Lack of coal transportation infrastructure Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

18. Forest Clearance – Cumbersome Process - Various Stages • Estimation of Land Requirement • Application to Nodal Officer/PCCF/DFO for Various • Survey of forest area, Enumeration of trees and • demarcation of Forest land • 4. NOC from Village Advisory Committee / Gram Samittee • NOC on jungle-jhari land / Revenue forest by State • Govt. • NOC under FRA-2006 Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

19. DGPS survey & its authentication by State Bodies like • ORSAC (in Odisha) • Processing of Forest proposal : DFO - CF - CCF/RCCF – • PCCF - Secy (Forest) State Govt - MoEF, New Delhi • Site Inspection by Regional office of MOEF – • Submission of Report to MOEF, New Delhi • Presentation to Forest Advisory Committee of MOEF • by AIG (Forest) • 11. Approval of FAC recommendation by Hon’ble Minister • of Env. & Forests • 12. Stage-I forest clearance by MoEF, Delhi Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

20. Demand note from DFO for NPV of trees & • Compensatory Afforestation - Payment by block • allocatee, Identification of land for compensatory • afforestation • Submission of compliance report of Stage-I clearance • to DFO - CF - CCF/RCCF - PCCF - Secy (Forest) State • Govt - MoEF, New Delhi • Processing of Stage-II proposal at MOEF – approval by • IG / DG, Forests • 16. Stage-II clearance from MoEF Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

21. Order by DFO/RCCF to start demarcation of • forest land, Safety zone and CA areas • Approval of State Forest Deptt. to start tree • felling and transportation of tree logs MOC schedule stipulates 6 months to complete all these activities – Unrealistic in present scenario Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

22. Forest Clearance - Factors contributing to Delay - • Issuance of “No-Objection Certificate” on jungle-jhari • by Dist Admn. • Issuance of “No-Objection Certificate” on Forest • Rights Act by Dist Admn - Conductance of Gram • Sabhas & certification of its proceedings. • Old / not updated land records / forest records, • Mismatch of habitants / persons in actual possession • of the forest land, wrt available land records. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

23. Involvement of number of Central / State Government • departments and slow processing of proposal at State • Forest Dept. and MOEF. • Site inspection & submission of inspection report by • Regional Office of MOEF to MOEF, New Delhi. Non-availability of alternate land for compensatory afforestation. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

24. Forest Clearance – Suggested Measures - • Regular updation of land and forest records. • Creation of land data bank by Forest Dept. in • advance for Compensatory Afforestation. • State Forest Department need to process the • proposals within strict timelines. • Process repetition like site inspection by PCCF as well • as Regional Office of MOEF, etc. may be avoided. • More number of Forest Advisory Committees (FACs) • may be constituted by MOEF. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

25. Approval Environment Clearance Clearance by Expert Committee Environment Clearance - Flow Chart - Geological Report Site Clearance / TOR Mining plan Submission to SPCB Preparation of EIA/EMP Engagement of Agency Stage I Forest Clearance Public Hearing Submission of Comprehensive EIA/EMP along with Schedule II Performa to MOEF NOC from SPCB Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

26. Environment Clearance – Suggested Measures - • State Pollution Control Board may act in time-bound • manner – • Public Hearing • Report submission • Some sort of environment clearance for cluster of • coal blocksmay be thought of. • MOEF may consider more number of Expert • Appraisal Committees (EACs). Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

27. Land Acquisition – Factors contributing to Delay - • Processing of proposals / issuance of notifications • and disbursement of payment by State Govt. / • District Admn. • Non-availability of land records / very old records • with Dist Admn. • Inadequate manpower at Block / Dist. level. • Slow processing of Govt. land proposals at various • level of State Govt. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

28. Absence of Policy for dealing with encroachers • of less than 30 yrs. • Approval of R&R Plan by State Govt. • Local resistance - Law & Order situation • Non-standardization of procedures – varying • from State to State. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

29. Land Acquisition – Suggested Measures - • Specialized land acquisition department/ • agencies by State Governments may facilitate • land acquisition process such as IDCO in Odisha, • MSIDC in Maharashtra. • Special land acquisition cell at Dist. level. • Uniform R&R Policy for Coal Mining. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

30. Regular updation of land records, digitization. • Databank of land for public purposes. • Maintenance of comprehensive and intelligent • map database. Instant production of Cadastral maps • of any scales, themes and sizes. • Processing of land proposals – e-filing. Mining Industry can grow only with active support & involvement of State Govt. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

31. With the passing of the new land Acquisition LARR Act , the following changes have been made :- • The land price shall be roughly 4 times the normal • price • Job @ 1 person per family to be given to the • affected person • An annuity for 20 years has to be paid to the • affected family. • Active support & involvement of respective State • Govt. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

32. MOC considering ‘Reserve Price’ for coal blocks – • Milestone-based payment to State Govt. • Special thrust of State Govt. for land record • updation & digitization. • Expeditious Environment & Forest clearances – • Process simplification, Cut short process • repetitions, Single-window approach, more nos. of • FACs, EACs. • Infrastructure Development : • Expeditious development of Rail / Road with State • support Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

33. Dedicated freight / coal corridor • Master Network before allocation of coal blocks • with firm plan for Rail corridor. • Special Task Force for monitoring the project • implementation. • Adoption of latest technology & best practices in • Mining (UG & deep OC), deployment of high • capacity HEMM, indigenous manufacturing. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

34. The proposal of auction of coal blocks – Govt. of India has published a gazette on auction of coal blocks on February 2, 2012. Since then Govt. of India allocated 14 blocks to PSUs but no bidding has been done for allocation to private companies. Since the bidder is exposed to geological risks of coal deposit (faults, folds etc) which can drastically impact project viability, it is suggested to auction only explored blocks. This will reduce project risk drastically leading to better chances of project success. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

35. Moreover, even if an unexplored block is given to a party he will have to go for exploration prior to mine construction. Thus the project execution time remains same for unexplored blocks. Hence it is suggested that unexplored blocks are brought under explored category by the government and then auctioned. Thus there is a requirement of extensive and expeditious exploration by the government. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

36. Although the process for bidding has not yet been announced , it is likely to include upfront payment of the “intrinsic value” of coal and a per tonne payment after mining is started. It is suggested that there should only be a per tonne payment after mining is started since the coal block does not generate any cash flow before the same starts . An upfront payment is locked capital with the timelines for regulatory clearances not being defined or certain. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

37. RECOMMENDATIONS Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

38. After preparation of Mine Plan, can there be a • single window clearance – for environment, • forest, pollution etc. Let all of them sit together • and give the clearance within certain time • frame. It was tested and tried in Indonesia at • some stage. • Land Acquisition has to be made simpler – let • there be economic cost for the welfare of the • displaced persons, but process has to be • simpler than what is being proposed. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

39. It is to be understood that the person investing • his time, effort and money to do the mining is • not a criminal but an upright person, who wants • to be fair to everyone. Thapar House | 25 Brabourne Road | Kolkata | WB | 700001

40. THANK YOU Thapar House | 25 Brabourne Road | Kolkata | WB | 700001