Coal - What Industry Wants?

The coal sector needs reforms and now. The demand for coal is projected at 2.34 billion tonne in 2031-32, which is five-fold the current level of production. For satisfying the burgeoning appetite for energy, the coal sector needs to open up for private investments. Captive mining being the only route for private investments thus far, the results have not been encouraging. The policy permits independent mining companies to apply for coal blocks if they have firm supply contracts with approved end-users. However, this has not yielded the desired results. The end-users with no mining experience have to rely on contractors.
Project implementations have always lagged due to procedural delays. Pakri-Barwadih project of NTPC has been delayed too.
That not only delays planned production but also signals the implementation risks in coal mining sector, which may inhibit investments. The environmental and forest clearance processes should be made time bound and transparent without compromising on the quality of environmental risk mitigations.
Even the captive coal block allocation process has been slow, the last one started in December 2006 still to reach its natural conclusion. This has been primarily due to the scope of subjectivity in the process. Competitive bidding process with objective criteria can certainly help the cause.
The policy also needs to provide fillip to the clean coal and innovative technologies, including coal gasification and liquefaction. Even though such usages are classified as approved end-usage there has not been resources identified for allocation for them.
Pricing and distribution of coal can be made market oriented. Basis of pricing needs to be changed to globally accepted gross calorific values. Coal regulator may help bring in pricing accountability in the transition period from the current state to a state of vibrant markets with dynamic demand and supply forces determining equilibrium prices.

(My article was published by the Hindustan Times on February 27, 2008)