Indian Coal Sector: 2022 Year End Review

Indian Coal Sector: 2022 Year End Review

Achieving record coal production and thereby ensuring adequate coal supply to thermal power plants and other sectors across the country, bringing about innovative policy reforms to give further fillip to India’s energy security were some of the remarkable achievements of Coal Sector during the year 2022.

Record coal production of 780 million ton (provisional), successful auctioning of 64 coal mines so far under transparent commercial coal mine auction, holding Investors’ Conclave in different parts of the country, signing of crucial MoUs for Coal Gasification projects with premiere organizations like BHEL, IOCL, GAIL (India) were some of the other major highlights of Coal Ministry's achievements during the year.

Reforms and Policies

Policy for Auction of Coal Linkages to Non-Regulated Sector

Coal India Ltd (CIL) has completed five tranches of linkage auctions so far, where total 131.19 Million Tonne per annum of linkages have been booked by the successful bidders.

Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI) Policy

209.614 Million Tonne coal linkage have been booked / allocated under different provisions of the SHAKTI Policy.

New sub-sector under the Policy for Auction of coal linkages of Non-Regulated Sector (NRS)

A new Sub-sector ‘Production of Syn-Gas leading to coal gasification’ has been created in 2022 under the NRS linkage auctions in order to encourage coal gasification technology so that new consumers requiring coal for  gasification are incentivized. This will also mitigate the adverse impacts of the conventional use of coal on the environment.

Single window for e-auction of coal

Government has recently approved a new mechanism for e-auction of coal by the coal companies. The erstwhile sectoral e-auction windows of Coal India Limited has been done away with and henceforth, all the non-linkage coal of the coal companies would be sold through one e-auction window of Coal India Limited / Singaren Collieries Company Limited.

This single e-auction window will cater to all the sectors like power & non regulated sector included traders. Therefore, coal of any particular grade would be sold in the market to all consumers at one rate (one nation - one coal grade - one rate).

Amendment to NCDP

To promote optimum utilization of coal resources in the national interest, enabling provisions has been made by way of amendment to the New Coal Distribution Policy (NCDP), 2007, in order to allow the coal produced from Closed / Abandoned / Discontinued mines of CIL / SCCL to be sold through a transparent and objective manner as per the guidelines issued by Ministry of Coal from time to time.

Coal linkages for gasification plants of the coal companies

CIL / SCCL have been allowed to provide long term allotment of coal to their own gasification plants at prices as may be decided by the coal company. This move will encourage coal gasification technology in the country and will help in early establishment of this new use of coal.

Mineral Concession (Amendment) Rules, 2022

The Ministry of Coal has amended Mineral Concession Rules, 1960 (MCR) by notifying Mineral Concession (Amendment) Rules, 2022 vide notification dated 7 September 2022 with a view to decriminalize its provisions. MCR regulates the application and grant of mineral concessions such as reconnaissance permit, prospecting license and mining lease. These concessions are pre-requisites for development and operationalization of mines entailing several compliances on the part of businesses.

Coal Production and Dispatch

The year 2022 (up to November, 2022), all India Coal production (CIL, SCCL & Captive mines) is 779.108 MT (Provisional) and Coal off take is 781.973 MT (Provisional). Coal dispatch to Power Sector is 662.562 MT (Provisional), E-Auction by CIL and SCCL is 56.45 MT.

Production Growth

The all India coal production in the Financial Year 2021-2022 was 778.19 Million Tonne (MT) in comparison to 716.083 MT in the year 2020-2021.

Further, in the current financial year upto November 2022, the country has produced about 524.2 MT of coal as compared to about 448.1 MT during the same period of last year with a growth of about 17%.

Washeries

At present, domestic raw coking coal washing capacity is about 23 MT per annum including 9.26 MT of the private sector. Coal India Ltd. (CIL) is planning to set up and operationalize nine more new washeries with a capacity of 30 MTPA. With setting up of new washeries, it is estimated that CIL will be able to supply about 15 MT of washed coking coal to the steel sector, thereby reducing import of coking coal.

Mining Developers cum Operators

Ministry of Coal intent to engage reputed MDOs in coal mines, through open global tenders, and to ramp up domestic coal output and reduce import dependency to extent possible. The contract period of engagement is for 25 years or life of mine whichever is less.

The MDOs would excavate and deliver coal to coal companies in accordance with the approved mining plan. MDOs would bring to the table mutually beneficial technology infusion, economically viable operations and increased production. Since contracts offered to them are on long-term basis, allied infrastructure at mine projects also would be developed by these private players. They shall facilitate R&R issues, land acquisitions, green clearances and coordination with State and Central Pollution Boards.

Coal India Limited (CIL) has issued letters of acceptance for seven coal projects to be pursued through engagement of Mine Developer cum operator mode. Cumulatively, these projects have production capacity of close to 100 million tonne per year.

Out of balance 8 projects, LoA for two projects will be issued shortly.  The remaining 6 projects are at different stages of tendering.

Coal Block Allocation

Mines and Minerals (Development and Regulation) Act, 1957

Under the provisions of Mines and Minerals (Development and Regulation) Act, 1957 and the Rules made thereunder, 22 coal blocks of Madhya Pradesh, Odisha, Chhattisgarh, Jharkhand, Assam and Telangana have been successfully auctioned.

Commercial Coal Mining

To reduce import of coal and to promote domestic production, auction-based regime introduced in 2014 allowed private sector participation, however, it was limited to captive usage in own end use plants. The sector has been opened up for commercial coal mining by private players in 2020 and first ever successful auction of commercial mining was launched by the Prime Minister in 2020 and concluded with allocation of 19 coal mines.

Commercial coal block auctions are conducted in a two-stage online bidding process, which involves technical screening and submission of competitive initial price offer in the first stage, and a second and final stage where better price offers are intended to be received.