by ajoy k. das

Even as the Indian government draws up grandiose plans to auction 200 coal blocks over the next five years, 43 of the total 85 blocks allocated since 2015 have yet to be put into operation, with a total of 159 mandatory approvals still pending over the years.

Information sourced from the federal Ministry of Coal shows that since auction was made mandatory for allocation of coal blocks and 85 assets handed over to various government and private operators, the latter has “not taken any necessary action.”

In the case of eight blocks, operators have not even completed a mining plan, while in the case of 27 blocks, environmental clearances were still pending. Approval of mining leases were pending in the case of 28 blocks, including 17 blocks, according to the ministry, operators were yet to “take necessary action.” Clearance of land acquisition were pending in the case of 39 blocks since their allocations in 2015.

The slow progress of operationalization of already allocated coal assets is in stark contrast to the Ministry of Coal’s plans to auction another 200 coal blocks over the next five years, expecting to yield an incremental domestic coal production of 400 million tons, at peak capacity for each project.

The ministry reckons that with an additional 400 million tons of domestic production and state-miner, Coal India Ltd. (CIL) achieving its targeted production of 660 million tons over the next fiscal year, coal imports into the country would drop to nil over the next five years.

Having effectively scrapped the nationalization of the coal mining industry and opening up coal mining and production to private miners without any end-use restrictions and permitting 100% foreign direct investments (FDI), the ministry expects to complete auction of 40 of the 200 identified coal blocks before the end of the current fiscal year on March 31. This would yield an incremental 50 million tons per year to domestic coal production.

“Holding auctions and allocation of coal blocks is only half the job. The challenge is to get mining project operational within shortest possible gestation period,” a ministry official said.

“Now that commercial coal mining will start and private miners will be allocated assets on revenue sharing contracts, the ministry is exploring options of incorporating fiscal incentives to bidders who commit fastest project completion and commencement of production. Unless auctions are backed by quick production, goals of achieving nil coal imports will continue to be elusive.”

Government data shows that India’s coal import bill per year crossed the $20 billion mark the last fiscal year. According to industry estimates, Indian coal imports during April-November 2019, was recorded at 161 million tons, up 4% over the corresponding period of the previous year and forecast to close on March 31, 2020, with inward shipment of 235 million tons.