Coal Blocks need fast tracking to save India from energy crisis

1. Coal Blocks need fast tracking to save India from energy crisis • JPPanda. Managing Director Priya mining Consulatncy and Services Pvt Ltd

2. Non governance- a serious issue • Amid all the confusion regarding the coal block allotment, there is another very important aspect that is often ignored – that of non-governance, which is unfortunately a very serious issue in our country. • The CAG has projected a loss of `1.89 lakh crore for not opting for the auction route for the coal blocks.

3. Financial loss due non governance • MoC does not take decision of CBA acquired land handed over to new block holders. • MoEF does not take decision on environment clearances and forestry clearances. • No afforestation is being done even though thousands of crores have been deposited by block holders? • That non clearance is causing huge loss to the nation is not understood at all. • The state governments withholding PL and ML for unspeakable reasons. • In the name of protecting environment everything is being done to withhold clearances, many a time on flimsy grounds

4. CAG should calculate loss to the nation for withholding clearances • If CAG could calculate a presumptive loss of Rs 1.89 lac crore for not opting the auction route for the Coal Blocks, it should be possible to also calculate the losses mentioned below. • The cost of delay or not taking decision by various ministries like MoC, MoEF, Various coal producing States and pollution control Boards is enormous and will runs more than the perceived loss of 1.89 lac crores.

5. Odisha coal blocks • As an example, let us examine the cases of coal blocks allotted to different power, cement and steel plants etc. in the state of Odisha Red tape is the bane of all captive coal blocks in the state. • The hundred and odd Sponge iron plants and a few steel plants in Odisha have changed the industrail landscape of western Odisha , one of the most backward areas. Such coal based sponge iron plants etc. have done wonders for employment generation etc. in western Odisha. • Had the allotted coal blocks been not stuck up due to non governance of the Govts., both state and centre, Odisha would have been in a position to produce 400 MTPA coal and nearly 80000 MW of power and the states’ financial complexion could have completely changed by industrialization.

6. Coal blocks of Odisha • There are about 27 coal blocks allotted in the state of Odisha. between 2003 to 2008, but only one mine has started production. Most of the blocks are awaiting EC (environment), FC (forest clearance), EMP (environment management plan clearance),PL (Prospecting lease), ML (mining lease approval) • LA (land acquisition) has become a problem due to lack of policy by both centre and state. • The list of blocks are shown in the next slide

7. CE – Environment clearance, FC- Forestry clearances, EMP-Environment management plan, ML- Miining Lease and LA – Land acquisition

8. Loss to the nation • These 27 blocks have an estimated reserves of 10000 Mil. T and are to produce nearly 400 mil. T per annum. Normally by this time they should have been producing atleast 400 Mtpa but to be on the safe side, if things had been put in place and clearances had been made available, these blocks would have been producing positively more than 200 Mtpa of coal. The allotment letter to the allottees provides that coal production has to start on 36 months for OC mine and 48 months for underground mine. All the blocks were allotted before the last three years. Not one has started. • Power generation would have been at least 40000MW • If one was to work the loss caused to the nation by non governance by the authorities then the loss would work out to be phenomenal, much more that what CAG has assessed on account coal block allocation

9. Losses to the nation • Loss of valuable foreign exchange for 200 Mt import @ $150 (taking Rs55 per $)per tonne is nearly Rs165000 crores per annum if India imports the coal to feed to its power stations • Loss of revenue to state and governments by way of royalty(@ of Rs 100 per tonne) is Rs2000 crores per annum • Loss of sales tax (4%)and income tax(30%) to the GovtRs10000crores crores • Presumptive loss Loss due to agitation etc. because load shedding Rs 10000 crore • Indirect losses due to poor growth of GDP, unemployment etcRs100000 lac crores. • The total is 2,70,000 crores/per year • Can India afford such a huge loss

10. What is country’s priority • The country needs coal for power and other industries very badly and that too very quickly. Our more concentration should be as to how the allocated coal blocks start production urgently and the country should move fast in the path of higher GDP growth. • The exercise of loss on account of allocation of blocks without auction is something which we should be kept aside and not take a centre stage as it is taken now. The whole of the nation particularly the parliament has been so much taken up with this issue that all other matters have taken a back seat.

11. Digging the past is retrograde step • If we were to continue to looking the past as what has been the loss on account of past decisions in the mineral sector, the there will be no end as we can remain permanently busy in working out the past losses • Calculate all the losses to the country for not going through auction route for all minerals for the last 65 years. • Loss on account of Tata and other private parties given chromite lease carving out pieces from the mining lease of OMC, a state Govt undertaking. • Loss on account of all the iron ore leases for the last 65 years in Odisha, Jharkhand and Karanataka given with out going through auction route.

12. The country is paying a heavier price • The country is paying a heavier price for lack of governance/decision making. It will not be far when regular blackouts shall be the daily feature. If we want to remain perpetually poor we should waste our time debating for years the losses due to coal block allotment. Instead we should look forward and start the coal mines urgently. Otherwise the danger of India slipping on all fronts and slow growth would result in unrest amongst population which will be impossible to control.

13. Has the private sector been faultless? • It is true that, the private sector who has been allotted Coal Blocks, neither had the expertise nor the necessary technical manpower to start so many mines. Indeed the record is extremely poor only 28 mines out of 214 have started production. These are mostly very small mines except a few JV companies of EMTA group with Bengal and Punjab state electricity boards. • But gradually the private sector will pick up once the environment and forest clearances are granted. • All the allocatees whether Govt or private have one common grievance non clearance by different Govt agencies like MoEF for EC (environment), FC (forest clearance), EMP (environment management plan clearance), State Govt for PL (Prospecting lease), ML (mining lease approval) and LA (land acquisition).

14. Dismal progress of coal blocks • Peeved at the dismal progress, the coal ministry has pulled up existing coal block allocattees, both public and private, for delay in the development of captive blocks. Only last month, the ministry of coal has declared it has identified as many as 93 coal blocks where almost all the requisite milestones are pending. Of these, 45 belong to government sector companies and the rest 48 to the private sector. • It is surprising that Jaitapur nuclear power plant got all the environmental clearances within 80 days but for coal projects clearances are pending for years. Coal project should be much more important as it is the back bone of India’s energy security.

15. Stop talibanism in the name of environment/forestry clearance • A recent editorial in Times of India, Srivatsa Krishna says that “ India adds one Australia every year by way of population. Either we provide basic facilities like food , shelter and electricity to our booming population or protect a few elephant and tiger corridors”. • The recent black out of 60 crore population of India will be regular affair and no political party can survive when people move to the streets. The very existence of India will be in danger. • We are in the doorstep of an energy emergency unless we act fast. In the words of Srivasta Krishna, in the name of environment protectionism, the MoEF should not indulge in environment ‘Talibanism’.

16. Lack of coordination between MoC and MoEF • There failure to get clearances are both for Private sector as well as Public sector and the ministry of coal is aware of it but somehow there is no forward movement and it appears that there lack of appreciation of the seriousness of the crisis and therefore there is no coordination between MoEF and MoC • Why coal ministry should be there if they cannot coordinate with other mininstries. Dismantle coal ministry as suggested earlier by Mr Chidambaram and mange the total issue through Coal India

17. Coal India the maharatna company being allowed to stagnate • Do we want to finish the Maharatna company Coal India by refusing environmental and forestry clearances? Some of its subsidiary companies are ISO 14000 for environment management and yet it does not get clearances. • True that Coal India has to be proactive for necessary clearances but • 34 projects need environment clearance Coal India the biggest Coal Company in the world is stagnating for last 2-3 years. They also face the same problem of forestry and environmental clearances. • As per one study, Coal India can more than double its output to 1132 million Tonnes from its present production of 464 million tonnes provided it secures the necessary clearances for its 179 projects and start production from these projects by 2016-17

18. Status of Coal India Projects • Out of 179, 130 proposal are awaiting stage I clearance and rest 49 stage II forestry clearance. • Stage I clearance: It is like in principle clearance. Forest Dept. lays down conditions, seeks deposits for land etc. • Satge II clearance : if conditions of stage I are fulfilled and compensatory afforestation money is deposited, then stage II clearance is granted • This process takes anything above 4 to 5 years and sometimes up to 10 years. • Total area needing forestry clearance is 15656 hectares for stage I & 13115 hectares for stage II • Out of 179 projects waiting for clearances • 45 are awaiting approval at MoEF Level • 26 awaiting forestry clearance at MOEF Stage I level, will contribute 26 million tonnes per annum (2016-17) • 19 proposal awaiting stage II clearance will contribute 26 million tonnes per annum (2016-17) • 57 environmental clearances of incremental capacity of 137 Mt/year are awaiting clearance at various levels.

19. Contd….. • 8 proposals, capacity 14.44 Mt awaiting terms of reference(TOR) • 3 proposals, capacity 21.86 Mt awaiting clearance from Expert Appraisal Committee(EAC) • 29 proposal, capacity 77.26 Mt awaiting final clearance • Out of these 57 proposals 15 are also awaiting stage 1 forest clearance • What would be the production from projects which are in various stages of implementation? • 147 projects, capacity 437 Mt are in various stages of implementation • 136 projects capacity 333.83 Mt planned to contribute in 2016-17 • Out of the above 147 projects • 80 require forestry & environment clearance • 13 projects need forest clearance • 20 projects need both forest and environment clearance.

20. What can central Govt do to fast track the process ? • All forestry applications must be cleared in a strictly time bound manner. Officers must be given specific time bound jobs and in case of failure, accountability established and punitive action taken. • Project should not be held for Compensatory afforestation issues it should go hand in hand fastest possible way to compensate for the loss of forest cover. • Alternately Govt should set up emergency machinery to clear all projects in a time bound manner considering that if delayed further, the country will face disaster by way of unemployment, social unrest and chaos. The country will become bankrupt by importing coal at exorbitant rates. Indeed a war room strategy should be developed.

21. Conclusion • It is indeed unfortunate that the government is turning a blind eye to all these advantages and instead getting caught in the mire of red tape. The good work done by quick policy decisions will far outdo the harm done by supposed to be scam in coal block allocations • The states will benefit the most out of these mines if they go fast track. Stumbling blocks of the clearances must be removed very quickly The States which appear to be in dormant state must activate themselves and work to a well thought of time bound action plan. • There should be accountability of the officers to whom the time bound task is given. For any callous delay on their part, punitive action should be taken. If the top administration becomes very serious and business like, all thing will fall in place and coal production will jump up.

22. Are we prepared for the long hours of laod shedding? • If timely clearances are not given to the coal projects and the other issues more of political in nature remain on the front burner then country and its economic growth will suffer. We will be back to dark age of poverty. The unemployment due to poor GDP and the long hours of load shedding due to no electricity will result in social and political unrest of unimaginable dimensions

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