Captive Coal Production: The Road Ahead..

Captive is a bad word but a good option at least in the coal production. Though 198 coal blocks of reserves over 40 billion tones were allocated till now, production could only commence from 25 blocks. The share of coal production is still below 10% of the total coal produced in the country. Problems are aplenty for coal production through captive blocks and solutions few but the road ahead is slowly and steadily emerging.

Even a 100 percent FDI in captive coal failed to provide the right incentives for players to ramp up the production. It clearly shows a lack of seriousness and inability in case of captive miners. What could be the way forward to resolve all the challenges faced by captive coal miners? Is there any scope of changing the policies? How could be the captive mining be incentivised so as to attract serious players in the field.

The government should be flexible enough to change rules and regulations so as to allot explored blocks to captive developers. Government takes first initiative allowing power companies to use surplus coal available to similar end use project of same company as in case of Sasan UMPP. The earlier norms was to transfer the excess coal to CIL.

Even the identified explored blocks which are retained by CIL to be mined in 12^th plan and onwards must be awarded to private developers for captive development as the gap between demand and supply is growing at an alarming scale. India should take aggressive steps to address this issue and it might probably one of alternative solution to address coal issues in India.

The option of competitive bidding for coal blocks should be explored and be made project specific like in case for UMPP in power. All the power projects which will be awarded on the basis of competitive bidding must be allocated coal blocks in advance so as to make the project more viable by taking away the fuel risk component. The method of allocating coal quota should be discarded and some portion of coal produced from the captive coal should be set aside for merchant sell through e auctioning. It will attract serious private developers towards developing the coal blocks which otherwise would have taken more tome to develop.

Monitoring process should be made stringent and huge penalty may be levied on non serious developers. Most importantly government should first identify, explore the coal blocks and facilitate in acquiring all approvals in place before awarding any coal block for captive development. This will definitely reduce the time line of coal block development for at least 24 to 30 months.

Though India looks for massive coal import option to mitigate the coal crisis in future, it would be better if it reforms the coal sector and mend certain acts so as to open up the coal sector for a better market discovery. Some amount of captive coal should be allowed for merchant sale so as to attract serious and big players to chip in and discover the huge opportunities lying untapped beneath the ground.