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Vol. XLVI No. 9 December 2017 Published on : 28.12.2017

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From the Editorâ&#x20AC;&#x2122;s Desk Though the production and offtake performance of Coal India Limited is little lower than the actual target in December but average coal inventory rose to nine days for power plants. Consistently Power Sector has shown higher demand of coal due to rising Plant Load Factor (PLF). Higher PLF denotes higher output and more efficient plant which is always welcome but catering to higher demand throughout the year is the tough challenge being experienced by CIL and Subsidiaries. Though clearing the backlog of arrears is presently looked after, still pending number of rakes are quite high in the Non-lapsable category. Captive Power Plants (CPPs) are finding it difficult to receive their linkage as well as auction quantity. With the disappearing linkage supply, sourcing is going to be really challenging in the coming years. Understanding this situation, Government of India has put special impetus on production from blocks both in the Private and Public Sector. Ministry of Coal has decided to allot 11 coal mines to stateowned Coal India Limited, which will add 225 million tonnes to the annual production capacity of the company by 2022. Though primary focus may not shift from the fossil fuel, ultimately energy basket may be consisting of mixed options tilting slightly towards renewables.

4 | CCAI Monthly Newsletter December 2017

CCAI Monthly Newsletter Vol. XLVI No. 9 December 2017

Content 06 |Consumers’ Page

Official Organ of the Coal Consumers’ Association of India. Disseminates News and Views on Coal and all other sources of Energy.

08|Power

4, India Exchange Place - 7th Floor Kolkata - 700 001 Landline : +91 33 22304488 / 22621516 E-mail : sec.ccai@gamil.com Website : www.ccai.co.in

12|Domestic

Editor : Subhasri Nandi

18|Global

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44 |Production and Offtake Performance of CIL and Subsidiary Companies CCAI Monthly Newsletter December 2017

CONSUMERS’ PAGE Present Coal Scenario CIL has produced 54.63 mt of coal in December only, missing the production target of 58.89 mt for the month by seven per cent. Its off-take for December only stood at 53.44 mt, only one per cent lower than the actual target of 53.84 mt. CMD Coal India Limited had stated that the company was pushing hard to meet the 600 mt production target for the fiscal 2017-18 and the one billion tonne production mark for 2019-20.

Consumers’ Concern 1. Coal Stock Position We have witnessed the increased demand for coal during August and September when inventories at power plants dipped to 6 days’ stock. Nevertheless, increased production has helped ease the situation reducing the number of plants with super critical stocks. Inventory at power plants is over 13 million tonnes, equivalent to 9 days stock. Though the coal supply situation is easing out gradually, still there is backlog of more than 3500 rakes in the Non-lapsable category. Power Plant rakes are getting lapsed every month. 2. GCV slippage repeatedly found Power Consumers are repeatedly complaining on GCV slippage from different areas of ECL and BCCL. After continuation of Third Party Sampling & Analysis consumers are not satisfied with the quality specially from these two Subsidiary Coal Companies resulting in loss to the Power Plants. 3. Supply of degraded burnt coal to Non-power consumers As per certain auction consumers, degraded burnt coal mixed with sand and earth have been received from Amrapali Colliery of CCL. Power generation at Captive Power Plants has been disrupted by using such exhausted coal. Similar issues have been raised by consumers for Mohan and Urdan Mines of WCL and a few months back from Jampali of SECL also. Coal Consumers have urged for providing the actual booked quality from other available sources or refund of the EMD at the earliest enabling them to buy coal further.

4. Adjustment of DMF from 12.01.2015 to 20.10.2015 for Coal Mining Companies Consumers lifting coal from Madhya Pradesh have been directed to deposit VAT/CST/Entry Tax/MP Tax/ Excise Duty on DMF amount by Western Coalfields Limited (WCL) vide notification no NGP/WCL/S&M/ Comml/1021 dated 06.12.2017. Consumers have requested to withdraw the notification as the principal demand does not exist. 5. Long pendency of allotted higher grade coal to Non-power FSA Consumers As per CIL notification, 25% of Monthly Scheduled Quantity (MSQ) is to be taken from higher grade coal (G2-G7) by the consumers having FSAs with respective coal companies. The decision was taken by CIL when there was no such demand of higher grade coal but since 2017 the demand of domestic coal has steeply increased irrespective of gradation. Considering the long pendency at siding for specific grades, consumers have requested for withdrawal of said condition so that they may procure from wider range of GCV bands. 6. Refund of CST While depositing payment for coal value, consumers deposited CST @ 5% instead of CST @ 2% against C-Form at requisite Quarter-end for all purchases of the period before 1st July, 2017. The refund against C-Form transactions should be released at the earliest. However, till date many consumers in spite of their depositing ‘C’ form in time have not received any refund of excess CST amount deposited by them.

Railways 1. Loss due to under loading and over loading of coal in wagons Railways has fixed the carrying capacity (CC) of each wagon and freight is being taken on the basis of that fixed CC. But coal companies are loading coal considering its stencil capacity which is much lower than actual carrying capacity (CC) decided by Railways in N type of wagons resulting in huge loss to the coal consumers. 2. Received tare weight is lower than the actual weight The tare weight considered by railways is lower than the actual tare weight by 0.3 to 0.6 MT. More old the rake is, higher the actual weight. This is resulting in 25-35 MT less weight in each coal rake with a huge accumulated loss for the company. For power sector, often the issue of transit loss with Regulators crop up due to the above problem. They are already striving hard to reduce the cost of generation. 3. Rakes for transportation of coal Due to increasing demand (rising PLF) with supply of more rakes also, availability is difficult at times. Railway Board and Zonal Railways are taking utmost care to supply rakes according to the demand.

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POWER Power ministry seeks faster coal supply to Shakti winners The power ministry has asked the coal ministry to issue directions to Coal India Ltd to start coal supply to the winners of coal contracts auctions without waiting for approval from the power regulator Central Electricity Regulatory Commission (CERC). “Considering the urgent need of resolution of issues of stressed assets, ministry of coal is requested to advise CIL/SCCL to start coal supply provisionally after amended/supplementary PPA is signed between developer and the procure (Discom). After obtaining approval of the appropriate commission, FSA may be signed,” an office memorandum issued by the power ministry last week said. In meeting held by the power ministry last month, representatives from banks expressed concerns about delay in issue of coal allocation letters to auctions conducted by CIL for PPA holders under Shakti, the office memorandum said. Signing of firm coal supply agreements may take 2-3 months after issue of the coal allocation letters as the requirement of PPA and approval of the appropriate commission may take time, it said.

either operating at very low capacity levels or idling due to the lack of coal. We have been receiving additional rakes since the last few days, helping scale up generation.” Another executive at an independent power producing company said: “Supplies have regularised and are increasing at a slow and steady pace. We are now being able to plan better since we know how much coal we are to receive on a daily basis.” According to the Central Electricity Authority (CEA), stocks are considered critical if they fall below five days for pit-head plants. For non-pit-head plants, the threshold is less than a week.

Power ministry may ask discoms not to wait for regulator’s nod Power ministry may ask distribution companies to accept the revised tariffs quoted by power plants to win coal contracts in auctions without waiting for the regulator’s nod. “The regulator’s approval is a long-drawn process,” said a senior government official, who did not wish to be identified.

Power plants rebound as coal supplies steady

“Since it was a transparent online reverse auction approved by the cabinet, we’re planning to ask states to accept the revised tariffs while the regulatory process is underway, subject to its approval. This’ll ensure coal supplies to these projects are expedited.”

Indian power plants now have average coal inventory of about nine days, comfortably breaching the critical stock threshold that forced several generating companies to recently shut down units amid a crisis in supplies of the primary solid fuel. “Supplies have improved considerably and a large number of our units at power stations have been brought back up,” a senior executive at top state-run generating company NTPC said. “These units were

Under the scheme, power plants have to amend power purchase agreements (PPAs) with distribution companies to factor in the discount in tariffs offered by them during the auction. As per the scheme, state-run miner Coal India Limited (CIL) has to issue letters of intent to the power companies within 15 days of conclusion of the auction and the companies have 45 days to amend the PPAs and get approval of Electricity Regulatory Commission.

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Thermal power plants’ capacity utilisation on the rise after 7 years of downtrend Thermal power plants are reporting higher capacity utilisation, reversing the trend that persisted for more than seven years as fewer new units came up and generation from other sources fell. Between April and November this year, utilisation was close to 60%, which analysts say is a level that makes plants financially viable. Power generation during the period was around 4.5% higher than the previous corresponding period. Capacity utilisation had fallen to 59% in this period last year, dropping regularly since 2010. However, it started rising since August this year. Capacity utilisation in April-November has exceeded the target of 58.32%. Sabyasachi Majumdar, senior vice president at ICRA Ratings, said that at 60% capacity utilisation margins of thermal power plants which provide for operating costs including interest cost, other than coal costs, starts to get fully covered. Less than 60% may lead to losses.

CIL’s supply to power plants rises 9% to 290 MT in Apr-Nov State-owned CIL said its coal supply to power plants increased by 9.2 per cent to 290.59 million tonnes (MTs) in the first eight months of the current fiscal, driven by high loading of rakes. “CIL’s (Coal India) coal supplies to power utilities of the country posted a healthy 9.2 per cent growth at 290.59 MTs during April-November 2017 continuing the upward spiral,” the world’s largest coal miner said in a statement.

er stations going up by over 2 MT to around 10 MT at the end of November 2017 compared to closing stock of 7.9 MT, October 2017,” the statement said. The miner said it is gearing to step up the supplies even further to pull the power stations out of the critical situation. Coal supplies to non-power sector is gradually increasing with stabilisation of supplies to power stations, it added. CIL registered 8.1 per cent growth in overall coal supplies for April-November period, maintaining the steady flow of the dry fuel to its customers with a staggering 27.69 MT increase in absolute terms compared to same period last year.

For the first time in 10 years, power plants show load factor rising, here is why Power plants across the country have shown that load factor is rising for the first time in 10 years. The uptrend is evident across Central, state and private generation capacities. The increased demand is a welcome thing. Notably, this has been on a steady downward slide since 2007-08 — when the PLF of coal and lignite based power plants peaked at 78.5 per cent. The Plant Load Factor (PLF) is the total energy produced corresponding to scheduled generation during the period, expressed as a percentage of energy sent out vis-à-vis the plant’s installed capacity — has topped the 65 per cent mark this fiscal (April-October data) for the first time since 2013-14. A high PLF means a higher output and a more efficient plant.

This translates to a robust 24.59 MTs increase in absolute terms compared to 266 MT during April-November 2016, the public sector firm said. The growth in coal supplies to thermal power stations last month was around 9 per cent higher at 40.92 MTs against 37.56 MTs supplied in November last year. “The increased supplies saw the coal stocks at powCCAI Monthly Newsletter December 2017

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It has been learnt that the primary reason behind this improvement is the power system linking the rest of the country to the southern region, which was facing power shortages due to transmission bottlenecks for a length of time and had been strengthened late last year, is seeing free flow of power on a round-the-clock basis now. An improvement in restocking activity in the quarter after the Goods and Services Tax rollout is also seen as having an impact — something that was reflected in the latest growth numbers as well.

The stable outlook reflects their expectation of generally stable industry conditions and government policy initiatives, which will likely lead to improvements in the financial position of state-owned electricity distribution companies, a statement issued here stated. “India (rated Baa2 stable by Moody’s) will see a change in its energy mix towards renewables, as the country adds more capacity and moves towards its commitments under the Paris Agreement on climate change,” it said.

Coal shortage sparks jitters in metals sector

However, the growth in renewable generation capacity will put pressure on conventional power generation, although most power producers are protected by availability based power purchase agreements.

Production in the metals sector has taken a hit as the captive power plants supplying power to the sector are forced to run at 50 per cent capacity due to coal shortage. Captive power plants (CPPs) have an installed capacity of about 40,000 MW and require 190 million tonnes of coal annually. As much as 3.6 million tonnes of coal is pending with the Coal India. The captive producers have said that they receiving 15-20 per cent less than the committed quantity of the raw material. They are getting average 50 per cent coal against secured linkages and Annual Contracted Quantity. Captive power industry that has a debt of $30 billion is only able to service 50-70 per cent of it. The coal dispatch to CPPs has been affected since April 2017. During this period, even though the coal was available, the captive units were not allotted rakes and the independent power producers (IPPs) were preferred on dispatches. The captive producers are suffering huge financial pressure because of the Coal India subsidiaries taking advance payment and bank guarantee against the allotment of coal but not dispatching as per allotment, blocking CPPs funds for six-nine months.

Power sector to be stable over 1.5 years; shift to renewables Rating agencies Moody’s Investors Service and ICRA said they have a stable outlook for the Indian power sector over the next 12-18 months and expects a change in its energy mix towards renewables.

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Moody’s also says that the government’s debt restructuring of the financially weak distribution utilities under the Ujwal Discom Assurance Yojana (UDAY) will gradually improve the financial conditions of state-owned discoms, thereby alleviating off-taker risk, which is a key negative factor for the credit quality of power generators.

India to achieve target of 100 GW of solar power by 2022 The government is confident of achieving the target of 100 Giga Watt (GW) of solar power capacity by 2022, Power Minister R K Singh said. As against the target of installing 100 GW of solar power capacity as on December 15, a capacity of 16,676 MW has been installed with another 6,500 MW capacity under installation, he said in the Lok Sabha during Question Hour. The trajectory of bidding of the rest of solar power capacity has been finalised as 20,000 MW in 2017-18, 30,000 MW in 2018-19 and 30,000 MW in 2019-20. “The government is confident of achieving the target of 100 GW of solar power capacity by 2022,” Singh said. Since the country does not have enough manufacturing capacity at present for solar cells and modules to meet the full demand, “both imported and indigenous solar sells and modules are being utilised for achieving the targets,” he said.

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DOMESTIC Coal India set to benefit from new fee and volume uptick Coal India Ltd (CIL)’s profitability should benefit from a rise in coal earnings. Last week, it introduced evacuation facility charges of Rs50 per tonne on all coal despatches (except despatches through rapid-loading arrangement) with immediate effect. This is expected to generate incremental annual revenue of Rs. 2,500 crore, adding Rs800 crore to revenue in the current fiscal alone. The additional charge is a quasi price hike, and will directly add to Ebitda, given no additional costs expected, pointed out analysts from JM Financial Institutional Securities Ltd in a report on 20 December. Hence this partially offsets wage cost provisioning impact (for union labourers) of Rs5, 500-5,600 crore, which is already factored into the brokerage’s estimates. Ebitda is short for earnings before interest, tax, depreciation and amortization, a measure of operating profitability. Still, investors weren’t impressed and the stock hardly reacted. In fact, CIL shares, though about 12% higher than their closing low in August have lagged the benchmark Sensex by a wide margin so far this fiscal. Based on Bloomberg data, the stock currently trades at 12.5 times estimated earnings for the next fiscal year.

Workmen productivity at Coal India doubles in a decade Productivity of workmen at Coal India has doubled in the past ten years, afeat that has mostly gone unnoticed. The company now produces 50% more coal with two-thirds of the manpower 10 years ago,

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thanks to higher utilisation of machines. According to the Coal Controller of India, output per shift — the quantum of coal each worker producer during a single shift — at the state-run company has increased from 8.6 tonnes for opencast mines in 2007-08 to 16.57 tonnes in 2017-18. During the same period, the company’s manpower reduced from 4.45 lakh to 3.1lakh. “Increased mechanisation at opencast mines including higher capacity equipment like dozers, dumpers and shovels has contributed enormously in increasing productivity of employees. Coal India took a conscious decision to increase usage of equipment from 2011-12; since then productivity took a steep turn resulting in increased productivity per employee,” a senior Coal India executive said.

Govt forms panel to find ways to increase output of captive coal blocks Cabinet secretary PK Sinha along with secretaries of power, coal, steel and top officials of several other ministries will look in to the reasons for low coal output from captive coal blocks and mull various options to raise their production. Over 40 captive blocks were producing close to 40 million tonnes before the Supreme Court cancelled all licences in 2014. Now the production is about 16 mtpa as a number of blocks once operational are yet to resume mining due to legal issues and lack of green clearances. “A high level committee comprising cabinet secretary and secretaries of various ministries has been set up to look into the bottlenecks and roadblocks in the operationalisation of coal blocks. It will suggest ways to overcome the issues and also raise production,” a senior government official said.

Coal block defaulters to face penalties The ministry of coal is devising methods to penalise coal block operators falling behind targeted production and revenue payment to states. Government officials said a committee has been formed under the secretary of coal ministry and with chief secretaries of mine-bearing states as members to decide the modus operandi to clear bureaucratic hurdles related to land, forest clearances, etc. According to the coal ministry, of the 34 auctioned or allotted mines, vesting order has been issued for 29. Of these, 15 have started production of close to 15.32 million tonnes. “Of 17 mines allocated to private/ public companies through auctions, 12 have started production. With respect to five, the process of taking penal action has started. Out of the 18 Schedule-II mines allotted to PSUs, three have become operational and others are expected to be operationalised in the next year,” said a senior ministry official. Coal production from the auctioned 29 mines stood at 15.32 million tonnes during 2016-17. This, the government said, was close to the production by these mines in 2014-15 when they were re-allocated. Cumulative production was 15.8 million tonnes then.

the ministries of power, railways, and coal, the number of super-critical and critical power plants has come down to 15, compared to about 30 in September. “The supply to the coal sector has improved with the railways providing even about 261 rakes per day last week. In November, we provided 240 rakes per day for Coal India, against 217 committed to the power sector,” said a senior railway official. According to the Central Electricity Authority data, the average number of days of coal stock left at power units was seven as of November 30. It also states that there are 10 super-critical power plants, with a stock of fewer than four days, and five critical ones with a stock of less than seven days. The railway data shows that the average number of rakes supplied to the power sector per day was 223 in October and 213 in September. Power demand in the winter peaks due to heating and the use of irrigation pumps. Of the 1,050 railways rakes, around 403 go to the coal sector, and the rest is shared by customers in the iron ore, cement, and fertiliser sectors.

Indian Railways record 5 per cent jump in freight, passenger traffic Railways give record rakes for in last 8 months coal The Indian Railways has registered a rise in both its In a relief to the power sector, the Indian Railways provided around 261 rakes every day for shipping coal last week. The government is claiming that with the efforts of

freight and passenger business during April-November as compared to the same period last year, according to a data with the national transporter. The freight traffic, which essentially serves the revenue of the railways, recorded an almost 5 per cent

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jump in loading during April 1-November 30, 2017, as compared to 2016. Amongst the commodities which contributed to this performance in the freight traffic include iron ore, which registered a 5.16 per cent growth in loading, cement which grew by 10.14 per cent, steel by 16.23 per cent, container traffic by 12.71 per cent and coal by 2.23 per cent. “In fact, freight loading has seen a 0.79 per cent growth which is more than what our target was for these months,” a senior official of the railway ministry said. Overall freight loading saw a growth of 747.70 million tonne in these eight months of this year, which is 32.02 million tonne more than last year.

Supreme Court allows use of petcoke by cement industry The Supreme Court allowed the cement industry to use petroleum coke, a dirtier alternative to coal which had temporarily been banned as pollution levels shot up in Delhi last month. India is the world’s biggest consumer of petroleum coke, better known as petcoke, a dark solid carbon material that emits 11 per cent more greenhouse gas than coal, according to studies. The Supreme Court in October banned the use of petcoke in and around New Delhi in a bid to clean the air in one of the world’s most polluted cities. But a blanket ban on the sale and use of petcoke could hit the country’s small and medium scale industries, which employ millions of workers and operate on thin margins, businesses say. Supreme Court judge Madan Bhimrao Lokur, in issuing the exemption order for cement and limestone

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industries, asked the government to frame guidelines for the use of petcoke. Shares of Indian cement companies, which use petcoke as feedstock, surged as much as 5 per cent on news of the court decision. Local producers of petcoke include Indian Oil Corp , Reliance Industries and Bharat Petroleum Corp. Delhi’s air quality has worsened this winter, piling pressure on authorities to take steps. Vehicles and industrial emissions as well as the burning of crop stubble in the farm states around Delhi have caused the spike in pollutants. Petcoke and other cheap, highly polluting fuel such as furnace oil are widely used by cement factories, dyeing units, paper mills, brick kilns and ceramics businesses. The government told the court that petcoke would only be used as feedstock and not as a fuel.

Demand hurdles stay in cement The cement industry is going through a difficult phase as prices continue to remain depressed amid low demand. Analysts and manufacturers now expect any reversal to occur in the next quarter of the fiscal (January-March) against an expected rebound in the present quarter. A part of the eight core industries, cement production has declined 2.7 per cent in October 2017 over the same period previous year, according to the commerce ministry. Its cumulative production declined 1.6 per cent during the April-October period compared with the corresponding period previous year. According to data from research firm Icra, production during the first seven months of 2017-18 was 165.6 million tonnes (mt) compared with 168.3mt a year ago. The offtake during the period was weak on account of slow real estate activity, shortage of sand and trailing effects of GST implementation.

Firm domestic coking coal price upsets steel sector The domestic steel sector, which has been facing supply glut globally, isn’t able to seek much relief back home either due to increase in input cost of coking coal. The coking coal prices, which were increased as much as 200 per cent in January this year to be linked with global prices, have not seen any revision since then. This comes at a time when the global coal prices have softened, promoting the case for imported coal for the steel sector. The current price of Indonesian coal is $49 per tonne, a seven per cent fall in the past six months.

Steel companies have to sustain by being competitive: Birender Singh Government’s policy approach for exit of financially stressed units certifies transparency in the process with the possibility of takeover by alternate efficient management under the new bankruptcy law, Steel Minister Chaudhary Birender Singh said. The statement comes a few days after after the government promulgated an ordinance to bar wilful bank loan defaulters as well as those with NPA accounts from bidding in auctions being done to recover loans. “Steel companies have to sustain by being competitive and having a disciplined approach towards loan

management,” an official statement quoted the minister as saying. He was speaking at the Global Forum on excess steel capacity in Berlin on November 30. In view of the optimistic possibilities of the future of the steel sector, India is going to be a major destination for steel investors, he said. “Steel being a deregulated sector in India, setting up of capacities is based on the investor s own assessment of profitability in the sector,” he said.

SAIL supplied 55,000 metric tonnes of steel for the Delhi Metro’s Magenta Line Steel Authority of India Ltd. (SAIL) has supplied approximately 55,000 metric tonnes of steel for the Delhi Metro’s Magenta Line, which was inaugurated recently by Prime Minister Narenda Modi. SAIL has supplied TMT, Structurals and Plates for this project, the company said in a statement. The 12.64 km-long section of the Magenta line inaugurated is part of the entire 36.98 km stretch that will connect Janakpuri west to Botanical Garden. Some of the major projects where SAIL has supplied steel in the recent past include, Mizoram’s biggest Tuirial Hydro electric project, Gujarat’s Sardar Sarovar project and the country’s longest bridge, ‘Dhola-Sadiya’ in Assam.

CCAI Monthly Newsletter December 2017

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GLOBAL Fuel shortage triggers jump in coal prices

shift away toward alternative sources must “continue to ensure that the number one principle should be keeping people warm in winter”.

China’s thermal coal prices jumped recently as natural gas shortages across the north spurred an unexpected resurgence in demand for coal-fired power.

An electric cargo ship is delivering coal in China

Coal futures jumped to 689.8 yuan ($104) per metric ton on Dec 11, topping a previous all-time high of 688.8 yuan set the previous week.

An all-electric cargo ship is now in use in China and it boasts an impressive 2.4 MWh energy storage capacity, Electrek reports. The ship is over 230 feet long, 45 feet wide and 14 feet deep and can carry a maximum of 2,000 tons. Supercapacitors and lithium batteries make up the energy storage system and the ship can go about 50 miles on one charge. It will run between two shipyards, each of which has a charging station that can recharge the ship in around two hours.

China Coal Price Index, the first index of its kind in the country, rose by 0.7 percentage points to 156.6 on Dec 8. The price of 5,000 kilocalorie coal and 5,500 kilocalorie coal in the northern ports reached 591 yuan and 612 yuan per ton respectively on Dec 8, up by 5 yuan and 2 yuan respectively from a week earlier. The increase comes after the country was forced to put the brakes on its ambitious push to convert millions of households to gas or electric heating. Because of a gas shortage, people have been told they can return to coal heating if needed.

China Allows Cities Burn Coal Again Because It’s Cold AF ASIA China has temporarily reversed its policy of banning coal in some northern cities due to the heating crisis currently plaguing the nation. The environment ministry issued the directive, allowing 28 cities across north-east China to use coal again, according to Chinese media (via BBC). In the statement, the ministry said it had “discovered that in some areas, works to replace coal with electricity or gas had yet to finish according to plan, and there were anxieties about fuel sources to provide heating”. It noted, however, that while the areas would be allowed to burn coal for heating in the meantime, their

18 | CCAI Monthly Newsletter December 2017

Moving towards electric power will be important for the shipping industry and this vessel is a step in that direction. Its payload however, is, wait for it, coal. And that may seem like an odd pairing but at least the ship isn’t burning fossil fuels while it’s carrying them. Tesla, Daimler, Cummins and Toyota are all working on shipping trucks that use alternative fuels and pushing our cargo ships in that direction will do a lot for the environment. The ship, which took its maiden voyage last month, will transport coal along the Pearl River in China’s Guangdong Province.

Chinese steel futures fall amid thin winter demand Chinese steel futures fell due to slow winter demand in the world’s top consumer, putting pressure on raw materials. The most active rebar on the Shanghai Futures Exchange dropped 1.3 percent to 3,760 yuan ($574.57) a tonne by the midday break. “Physical demand remains tepid, and we expect to see steel product inventories pile up more as buying from end-users was thinning,” said a trader in Hangzhou, China. Steel demand tapers off in China during winter months as construction activities slow, and prices typically drop. This winter there is some support, though, as Chinese steel mills have curbed their as part of national efforts to combat smog. Spot rebar prices stood steady at 4,330-4,350 yuan a tonne in Shanghai after a sharp fall of up to 400 yuan earlier this week, traders said. On the Dalian Commodity Exchange, coking coal fell 1.8 percent to 1,293.5 yuan a tonne. Coke inched down 0.9 percent to 1,984 yuan a tonne. Dalian iron ore edged up 0.2 percent to 518.5 yuan a tonne. Iron ore for delivery to China’s Qingdao port .IO62-

CNO=MB tumbled 4.5 percent to $72.62 a tonne from the previous day, according to Metal Bulletin.

Biggest Australian Business Lender to Stop New Coal Mine Funding National Australia Bank Ltd. pledged to stop funding new thermal coal mine developments and boost lending to renewable energy projects as part of global efforts to tackle climate change. “While we will continue to support our existing customers across the mining and energy sectors, including those with existing coal assets, NAB will no longer finance new thermal coal mining projects,” the nation’s largest business lender said. National Australia said it has created a A$200 million ($153 million) fund that lends money to existing renewable energy projects. It’s part of a new climate policy to be unveiled at the bank’s annual general meeting in Sydney. Australia’s largest banks have been restricting lending to high carbon emitters as they face pressure from activists and shareholders to mitigate climate risks. They’ve ruled out financing Adani Enterprises Ltd.’s $16.5 billion thermal coal project in Queensland amid opposition from environmentalists who say it will increase carbon pollution and endanger the health of the Great Barrier Reef marine park in the state’s north.

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Australia’s Wesfarmers to sell coal mine for A$700m Wesfarmers has agreed to sell a Queensland coal mine to US miner Coronado Coal Group for A$700m ($539m). The sale of the Curragh mine, which the company said was one of the world’s largest producers of metallurgical coal, also includes an ongoing share of export revenues over the next two years. The supermarkets-to-DIY conglomerate will book a post-tax profit of about A$100m from sale, having acquired the mine for A$200m in 2000. The divestment followed a broader strategic evaluation by the retailer of its resources businesses, Rob Scott, managing director of Wesfarmers, said. A review of its 40 per cent interest in the Bengalla coal mine was ongoing. Shares in the company were down 0.3 per cent following the announcement.

it also contains more planet-warming carbon and far more heart- and lung-damaging sulfur -- a key reason few American companies use it. Refineries instead are sending it around the world, especially to energy-hungry India, which last year got almost a fourth of all the fuel-grade “petcoke” the US shipped out, an Associated Press investigation found. In 2016, the US had sent more than 8 million tonnes of petcoke to India. That’s about 20 times more than in 2010, and enough to fill the Empire State Building eight times. The petcoke being burned in countless factories and plants is contributing to dangerously filthy air in India, which already has many of the world’s most polluted cities.

Sustainable energy balance needed to meet rising global dePetcoke imports from US will mand, say experts choke India further: Experts US oil refineries that are unable to sell a dirty fuel waste product at home are exporting vast quantities of it to India instead. Petroleum coke, the bottom-of-the-barrel leftover from refining Canadian tar sands crude and other heavy oils, is cheaper and burns hotter than coal. But

20 | CCAI Monthly Newsletter December 2017

With global energy demand expected to grow 30 per cent by 2040 as per International Energy Agency (IEA) estimates, a sustainable energy balance needs to be achieved to meet this requirement while also ensuring reduction in hazardous emissions, experts said. A stable and safe energy balance will require a combination of different sources of clean generation — with a mix of wind and solar combined with nucle-

ar power — from every country worldwide, they said. The Director General of the Russian state atomic energy corporation Rosatom, Alexey Likhachev, said that there will be no place for monogeneration in the future global picture. “In any case, both stability and peak loads will be provided by different types of generation: Solar, wind, and certainly nuclear, geothermal and many other renewables. We definitely consider nuclear energy to be a clean energy source that is environmentally comfortable for humankind,” he said. In recent times, carbon emissions have reached extremely high levels globally, raising questions about how the world’s energy system should develop in the future. An increasing number of experts believe that a carbon-free power industry should be developed with all those types of energy generation that are called carbon-free: Wind, water, solar and nuclear.

Newcastle: world’s biggest coal export port announces shift away from coal Newcastle, the world’s largest coal export port, must “urgently” diversify its traffic, the port’s incoming chairman has said, warning that the “long-term outlook for coal is a threat to the port”. The move has been received as a significant sign of the transition away from fossil fuels.

Coal makes up about 90% of the New South Wales port’s throughput, including some of the world’s highest quality coal for steel production and electricity generation.

Coal Industry Hums Along One Year After It Was Declared ‘Dead’ The New York Times ran an op-ed in 2016 titled “The Coal Industry Isn’t Coming Back.” Flash forward one year, coal exports are up nearly 70 percent and mines are extracting 54 million more tons of it, according to government statistics. Coal has increasingly lost market share to natural gas and green energy sources, mainly solar and wind, in the past few years. New drilling techniques made natural gas a more attractive option as federal regulations on coal power plants mounted. Aside from NYT, the coal industry was “dying” because it wasn’t the dominant source of electricity production in 2016. The Guardian also reported on “[t]he death of US coal,” noting the swath of coal company bankruptcies last year. But 2017 has been a resurgent year for coal. Americans exported 28 million tons, 68 percent, more coal in the first three quarters of 2017 than during the same period in 2016, the Energy Information Administration (EIA) reported. In those months, companies have exported 14 percent more than in all of 2016.

Coal to help relieve gas shortage The Beijing city government has ordered an immediate restart to coal-fueled generators to ease the shortage of liquefied natural gas in northern China. In a notice released but only widely publicized, the capital’s City Management Commission confirmed that the National Development and Reform Commission, the top economic planner, had ordered a restart of coal-fueled generators to reduce LNG consumption. Three major power plants in Beijing confirmed that they had received the notice, Caixin. To cut concentrations of PM2.5–hazardous fine particulate matter with a diameter of 2.5 microns or less–28 cities including Beijing, Tianjin and cities in Hebei, Shanxi, Shandong and Henan provinces were to use electricity or gas for heating this winter, instead of coal, which is considered the main cause of the lingering winter smog. CCAI Monthly Newsletter December 2017

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However, as the heating season began, some people in these areas found their homes and schools freezing, mainly due to LNG shortages. The Ministry of Environmental Protection has told authorities to “ensure a warm winter” for the public rather than delay heating supplies in some northern areas due to natural gas shortages or unfinished projects.

Coal in ‘freefall’ as new power plants dive by two-thirds Urban residents of Zhuozhou are more vocal about their grievances, as the sudden increase in natural gas demand means disruption in supply for existing users. “Every day from 7pm to early next morning, there’s no heating. Sometimes the gas supply is not stable when cooking,” said a taxi driver who gave his surname as Feng. Hebei provincial government, which administers Zhuozhou, issued an orange alert for natural gas supply on 28 November. It is the second on a four-tier warning system, indicating a demand-supply gap between 10% and 20% that will have a “relatively big impact” on economic and social operation. A woman in Beijing puts her scarf in front of her face to combat poor air quality. As temperatures drop to about -6C, rural residents say nights without heating are ‘unbearable’. Photograph: Nicolas Asfouri/AFP/ Getty Images The provincial government said it would cut supply for industrial users and prioritise use for residential and public buildings, including schools and hospitals. Neighbouring Shandong, Shanxi and Shaanxi provinces all report similar problems. The area surrounding Beijing is one of the worst polluted in China thanks to its massive industrial production, particularly of iron and steel. Air quality traditionally deteriorates further each winter, with burning of raw coal in rural homes exacerbating factory and vehicle pollution.

power-sucking data centres that keep the $2.8 billiona-year business running. It’s one of the many technology giants including Amazon.com Inc. and Alphabet Inc.’s Google demanding cheaper—and cleaner—electricity as their data demands grow. This hunger for power has set Silicon Valley on a collision course with the Trump administration, which is working up a plan to keep coal plants afloat by raising electricity prices. As a rare source of demand growth, these tech firms have become formidable advocates for clean energy. They’ve contracted enough renewable energy to displace at least 12 coal generators, and some are paying millions to sever ties with utilities to find their own supply. Big Tech is no longer “afraid to throw around their weight or their ability to influence—some might say bully—their local utility or local governments in what they want to get,” said Lucas Beran, a senior research analyst on IHS Markit’s data centre and cloud team.

Electricity supply won’t be compromised by limited coal supply – Eskom Despite a shortage of coal supply to the Hendrina power station, due to Optimum Coal Mine not fulfilling its contractual obligations, Eskom said the electricity supply will not be compromised. Eskom was responding to questions posed by Fin24 that Gupta-owned Tegeta’s Optimum Coal Mine is threatening to cut its coal supply to the power station in Mpumalanga. According to amaBhungane, leaked minutes from a meeting indicate that Tegeta wants Eskom to pay more that R150 per tonne for the coal. The minutes also revealed that Eskom is considering taking legal action against Tegeta.

From Amazon to Etsy, Silicon Valley fights Donald Trump’s plan to save coal

Eskom confirmed to Fin24 that there was a risk of “insufficient coal” at Hendrina. “This risk is primarily due to the threat of sustained suspension of supply by Optimum Coal Mine, and that Optimum is not meeting their contractual requirements,” said Eskom. The stock days are below the Grid Code requirement. “As at November 24 2017, Hendrina was reported to have approximately 10 coal stock days at its holding facility,” said Eskom.

Selling custom nose rings, crocheted bunnies and hand-carved Santas is energy-intensive stuff. Just ask Etsy Inc., the go-to marketplace for crafts that doubled its electricity use in two years to feed

Eskom is still investigating the “unexpected measurement” of low stock days and said it could be due to “deficiencies” in stock day accounting. “The previous assessment during October 2017 was 25 days.”

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CCAI Monthly Newsletter December 2017

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GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 1524. Transportation of Coal in Uncovered Vehicles. 27.12.2017 DR. J. JAYAVARDHAN: SHRI P.R. SUNDARAM: SHRI MOHITE PATIL VIJAYSINH SHANKARRAO: SHRIMATI SUPRIYA SULE: DR. HEENA VIJAYKUMAR GAVIT: SHRI B. VINOD KUMAR: SHRI SATAV RAJEEV:

ANSWER MINISTER OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL )

(b) whether the Government is taking any steps to mandate the use of covered vehicles for transportation of coal and if so, the details thereof; and

(a) & (b) Covered trucks prevent spillage of coal. Only in the event, when uncovered trucks are loaded over the brim level, lead to spillage of coal at the curves of Haul roads which gets crushed with the tyre and become airborne. In order to mandate the use of covered vehicles for transportation of coal, Ministry of Environment and Forest & Climate Change (MOEF&CC) while granting Environmental Clearance (EC) includes evacuation of coal in covered trucks in the general condition of permission. Further, Consent to Operate (CTO) under Air Act 1981, issued by State Pollution Control Boards (SPCB), also gives this condition for prevention of air pollution.

(c) the steps taken by the Government to ensure that coal transportation does not contribute to pollution especially in urban areas?

(c) The Government stipulates general and specific conditions in EC and Consents under air pollution to ensure the control of dust emissions. In addition to

Will the Minister of COAL be pleased to state: (a) whether transportation of coal in uncovered vehicles is a major contributor to pollution levels and if so, the details thereof;

24 | CCAI Monthly Newsletter December 2017

this, following steps are taken by Coal India Limited and its subsidiaries to control dust pollution due to coal transportation: i) Deployment of mobile sprinklers along haul roads to control dust generated by truck movement and dumpers. Optimum loading of coal trucks to avoid spillage on roads. ii) Blacktopping, strengthening of coal transportation roads regularly and scientifically. iii) Plantation in the mining activity areas, along roads to create green belts in and around the mines. Plantation along avenues are also being carried out. iv) Transportation of Coal to thermal power stations by rail / series of belt conveyors. Railway sidings are constructed to make rail head available nearer to mine to reduce road transportation. v) Construction of integrated Coal Handling Plant (CHP) for rapid loading wagon and trucks. vi) Adoption of tube conveyors for transportation of coal to thermal power plant in an environment friendly way. vii) Monitoring of ambient air quality in and around the mine site fortnightly as per Environment (Protection) Act, 2006.

Q. No. 1540. Transportation of Coal 27.12.2017 SHRI MALYADRI SRIRAM: Will the Minister of COAL be pleased to state: (a) whether PSU coal companies use the railways for transporting their coal; (b) if so, whether coal companies are now planning to switch over to road transport for operational ease; (c) whether costs would go up due to this switch over in mode of transport; (d) if so, the steps taken by the Government to ensure that costs of production of coal in public sector units do not go up; and (e) the other steps proposed by PSU coal companies to increase efficiencies across the board?

ANSWER MINISTER OF COAL IN THE MINISTRY OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL ) (a) Coal is sold on “FOR” (Free on rail/road) at railway sidings & road-sale points basis. Buyers use railways for transporting coal to the destinations. (b) There has been no switching over to other transport from railway system. However, in recent time to meet the spurt in coal demand, consumers located in the vicinity of mines (50-60 Kilometers) were requested to optimize their captive logistics capacity, including road transport, for supplementing coal movement. (c) Since sale of coal is made on “FOR” basis at railway sidings & road-sale points and buyers arrange transportation, Coal companies have no information in this regard. (d) Although the cost per tonne of coal will increase in FY 2017-18 over 2016-17 due to signing of 10th wage agreement of non-executive employees and proposed increase in executive salary as per 3rd RPC. Moreover, the following measures have been taken by CIL to bring down the operating cost. (i) E-reverse auction for finalization of contracts for explosives implemented. (ii) Adoption of mechanization in both underground and opencast mines. (iii) Converting unsafe, unviable underground mines into opencast mines. (iv) GPS/GPRS based vehicle tracking system, electronic surveillance by CCTV, RFID based boom barrier and reader & electronic weighbridges have been deployed at various subsidiaries for effecting monitoring. (v) Higher size HEMM has been planned to be deployed in major opencast projects for maximum extraction of coal economically. (e) Coal companies have taken the following measures to improve the work efficiency of coal mines: 1) Benchmarking of mining operations/equipment 2) Optimizing size and capacity of the mine 3) Use of Man riding system in underground mines 4) Use of mechanised drilling and roof bolting machine CCAI Monthly Newsletter December 2017

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5) Replacement of tub transport system by belt conveyors in underground mines 6) Cutting down the idle time and breakdown time of machinery by better maintenance and timely procurement of spares 7) Correcting mismatch in excavation and transport equipment capacity, by action at corrective level 8) Simulator training of workers for new technology & machinery 9) Proper monitoring at every level 10) Inclusion of Surface Miner in coal production from Opencast Projects 11) Implementation of SILO loading in high capacity mines for efficient dispatch.

Q. No. 1577. Efficiency of Coal Mines 27.12.2017 SHRIMATI BHAVANA PUNDALIKRAO GAWALI PATIL: Will the MINISTER OF COAL be pleased to state : (a) Whether the Union Government has taken any steps to increase the efficiency of coal mines in the country; (b) If so, the details thereof; (c) Whether any exchange of mines has been carried out to ensure supply of coal from coal mines located near to the plants and if so, the details thereof along with the savings accrued therefrom; and (d) Whether the Coal India Limited propose to increase the said savings by enhancing such exchange of mines and if so, the details thereof? ANSWER MINISTER OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL) (a) & (b): As informed by Coal India Limited (CIL), it has taken the following measures to improve the work efficiency of coal mines: 1) Benchmarking of mining operations/equipment 2) Optimizing size and capacity of the mine 3) Use of Man riding system in underground mines 4) Use of mechanised drilling and roof bolting machine 5) Replacement of tub transport system by belt con-

26 | CCAI Monthly Newsletter December 2017

veyors in underground mines 6) Cutting down the idle time and breakdown time of machinery by better maintenance and timely procurement of spares 7) Correcting mismatch in excavation and transport equipment capacity, by action at corrective level 8) Simulator training of workers for new technology & machinery 9) Proper monitoring at every level. (c) & (d): To reduce the cost of production of power utilities source rationalization of coal for TPPs has been the priority area for MOC/CIL. In June, 2014, an Inter-Ministerial Task Force was constituted by MOC for a comprehensive review of existing coal sources as also feasibility for rationalization of these sources with a view to optimize transportation cost. The IMTF held several rounds of meetings with representatives from Ministry of Coal, Power, Railways, Steel, Shipping, DIPP, CEA, NTPC, CIL, SCCL, Subsidiary coal companies and KPMG. After details deliberation, IMTF recommended rationalization of existing sources on case to case basis for 19 TPPs. The recommendations of IMTF was circulated vide MOC letter dated 2nd February, 2015. In the meanwhile, Policy for swapping of coal linkage as recommended by Standing Linkage Committee (Long-term) in its Meeting held on 11th August, 2014, an agreement was signed between GSECL and NTPC on November, 2014 by which 1.0 MT of domestic coal to be supplied by SECL to GSECL would be transferred to NTPC instead of GSECL. As per their mutually agreed terms, NTPC on the other hand would be importing equivalent quantity of 1 Mt of domestic coal for supply to GSECL plants. The Swapping mechanism was implemented by SECL in terms of the directives of Government of India vide Order No.23021/79/2014-CPD dated 09.12.2014. During 2015-16, rationalization of sources of all these 19 TPPs have been implemented by CIL/SCCL and revised Fuel Supply Agreements (FSAs) have been signed. This has resulted in rationalization of sources of 24.238 MT coal with a view to reduce transportation cost and annual savings of Rs.1013 crores of transportation cost. In addition to the above, Coal India has also rationalized sources of supply to the tune of 22.6 MT on the basis of the request received from the consum-

ers with a view to optimize the transportation cost and enhanced supply materialization resulting into annual savings in transportation cost to the tune of Rs.1526 crores. Rationalization in 2017-18 is 7.86 MT from April’17 to till date with annual potential savings of Rs.359 crores (Provisional).

Q. No. 1589, Mining of Coal

27.12.2017

SHRI JANARDAN MISHRA: Will the Minister of COAL be pleased to state: (a) whether the mining of coal is still unavoidable for development despite adverse environmental effects and if so, the details thereof; (b) the contribution of coal in the supply of energy at present; (c) the sectors other than energy where coal is being utilised; and (d) the efforts being made by the Government to replace coal? ANSWER MINISTER OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL ) (a) Coal is the prime source of energy in India and is likely to continue in the years to come. This is primarily due to abundance of occurrence of coal in India and that too at a cheaper rate. Hence, coal will continue to be the prime source of energy in India in near future. Like any other development activity, coal mining also has some adverse environmental effects if they are not suitably addressed. All the coal mining operations are being carried out after obtaining statutory environmental clearance and suitable mitigation measures are taken to keep the environmental attributes within prescribed limits and regular environmental monitoring carried out to ascertain the level of efficacy of pollution control measures. All the pollutants are kept within the prescribed limit and the report is submitted to regulatory agencies on a regular basis. Thus, sustainable mining operations are being carried out. (b): As informed by Ministry of Power, total coal based

generation during 2017- 18 (Apr-Nov) was 623.4 BU which is about 77% of total generation in the country. (c) : Apart from energy sector, coal is being used for other sectors like Steel, Cement, Sponge Iron, fertilizer etc. (d) : As per India’s Intended Nationally Determined Contribution (INDC) submitted to United Nations Framework Convention on Climate Change (UNFCCC), India is to achieve about 40 percent cumulative electric power installed capacity from non-fossil fuel based energy resources by 2030. This will to some extent replace coal. This will be achieved by tapping non-fossil fuel sources mainly solar, wind, nuclear and hydro.

Q. No.1644 DEPENDENCE ON IMPORTED COAL 28.12.2017 SHRI R. GOPALAKRISHNAN: Will the Minister of POWER be pleased to state: (a) whether a number of power plants are dependent on imported coal in the country; (b) if so, the details thereof and the reasons therefor, plant-wise; (c) whether the Government has taken any steps for freeing these power plants from dependence on imported coal and to utilize the domestically produced coal; and (d) if so, the details thereof? ANSWER THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER AND NEW & RENEWABLE ENERGY ( SHRI R. K. SINGH ) (a) to (d) : Yes, Madam. Some power plants have been designed to operate on imported coal and hence, there are technical constraints in operating them on domestic coal. As per reports with the Central Electricity Authority (CEA), the details of coal based thermal power plants designed on imported coal are given at Annex. In addition, some power plants use imported coal for blending with domestic coal. Ministry of Coal, in May 2017, has issued new coal linkage policy for Power Sector – 2017 SHAKTI POLICY. Under Clause B(vii) of the policy, a provision has

CCAI Monthly Newsletter December 2017

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been made for allocating coal linkage through bidding process to Independent Power Producers (IPPs) having Power Purchase Agreements (PPAs) based on imported coal, with full pass through of cost saving to consumers. Further, several State Sector projects which were envisaged on imported coal and now propose to use domestic coal have requested for accord of domestic coal linkage. These requests are considered under Clause B (i) of SHAKTI POLICY. ANNEX ANNEX REFERRED TO IN REPLY TO PARTS (a) TO (d) OF UNSTARRED QUESTION NO. 1644 TO BE ANSWERED IN THE LOK SABHA ON 28.12.2017. Coal based thermal power plants designed on imported coal Sl. Plant Name No.

Capacity Utility (MW)

Q. No.1809 Short Supply of Coal to Power Plants. 28.12.2017 SHRI B.N. CHANDRAPPA: Will the Minister of POWER be pleased to state: (a) whether the Government is aware that Karnataka is facing a critical drop in coal supply to generate electricity, if so, the details thereof; (b) whether the Government is aware that the thermal power plants of the State are on the verge of a crisis due to non-availability of coal, if so, the details thereof; (c) whether the Government is also aware that the State of Karnataka does not possess any coal mines and it depends on imported coal or coal from other States, if so, the details thereof; (d) whether it is true that this year has seen a much more drastic fall in coal supplies compared to previous years, if so, the details thereof along with the reasons for a huge decrease in coal supply to the State this year; and

1. Sikka TPS 500

Gujarat State Electricity Corporation Limited

2. Trombay TPS

1250

Tata Power

3. Ratnagiri

1200

JSW Energy

4. Torangullu

860

JSW Energy

(e) whether the Government is taking any measures to ensure that the coal is supplied to all the States including Karnataka to generate the electricity required for State and if so, the details thereof?

5. Mundra TPS*

4620

Adani Power

ANSWER

6. Uduppi TPS

1200

Adani Power

7. Mundra UMPP 4000

Coastal Gujarat Power Ltd.

8. Salaya TPS

1200

Essar

9. Simhapuri TPS

600

Simhapuri Energy

10. Thamminapatnam 300 TPS

Meenakshi Energy

11. Mutiara TPS

Costal Energen

1200

12. ITPCL-Cuddalore 1200

IL & FS

(*: Out of 4620 MW, 1980 MW is designed on 70:30 blending ratio.)

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THE MINISTER OF STATE (INDEPENDENT CHARGE) FOR POWER AND NEW & RENEWABLE ENERGY ( SHRI R. K. SINGH ) (a) & (b) Coal is supplied to the power plants through long-term linkage, e- auction and import. The plants also receive coal through captive coal mines in case a mine is allotted to a power plant. Karnataka has three coal based power plants in the State, namely, Raichur TPS (1720 MW), Bellary TPS (1700 MW) and Yermarus TPS (1600 MW). Bellary TPS and Yermarus TPS have no long-term coal linkage. As regards Raichur Thermal Power Plant, the materialisation of the prorata annual contracted quantity from Coal India Limited (CIL) and The Singareni Collieries Company Limited (SCCL) for 2017-18 (upto 13/12/2017) is around 77% and 100% respectively. The supply against bridge linkage to other power plants is on the best effort basis.

The coal supply to the power stations in Karnataka have improved and coal companies are making all efforts to further augment the supply to all the power stations. The average coal supplies to all power plants of KPCL during April to October 2017 was 3.26 rakes/day (12850 Tonnes Per Day (TPD) and this supplies were increased to 4.00 rakes/day in the month of November (16000 TPD) and 4.9 rakes/day (20000 TPD) in the month of December. The above supplies have necessitated improvement of coal stocks at the power plants of KPCL. (c) As per the Coal Mines (Special Provisions) Act, 2015 as well as the Mines and Minerals (Development and Regulation) Act, 1957, six (6) coal mines have been allocated to Karnataka Power Corporation Ltd (KPCL). The names of the Coal Mine/Block are: Baranj I, Baranj II, Baranj III, Baranj IV, Manora Deep and Kiloni with end use plant Bellary TPS (2x500 MW). These mines are located in Maharashtra. KPCL has imported 4.45 Lakh Tonnes during 2016-17. However, during 2017-18 (April-November), KPCL has not imported any coal.

iv. The Government has introduced a scheme SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India)-2017, to provide coal linkages to the power plants which do not have any linkage. v. The Government has introduced flexibility in utilization of domestic coal amongst power generating stations to reduce the cost of power generation. The State/Central Gencos would have flexibility to utilize their coal in optimum and cost effective manner in their own power plants as well as by transferring coal to other State/Central Gencos Power plants for generation of cheaper power.

(d) The coal receipt by the KPCL power plants (Bellary TPS and Raichur TPS) has reduced by 23% during 2017-18 (April-November) as against the corresponding period last year. Due to heavy monsoon in mine areas the domestic coal production, loading at mines and transportation of coal was affected. However, since 19.10.2017, there has been consistent increase in coal stock in all power stations including the power stations in Karnataka. The overall coal stock in the power stations in the country have increased from 7.3 Million Tonnes (MT) as on 19.10.2017 to 12.9 MT as on 25.12.2017. (e) The Union Government has taken the following measures to ensure that the coal is supplied to all the States including Karnataka to generate electricity required for the State: i. The availability of coal is being regularly monitored closely to ensure that generation of power plant is not affected due to shortage of coal. ii. On the request of the State Government, the duration of Bridge Linkage to Bellary Thermal Power Station (TPS) and Yeramarus TPS from SCCL has been extended twice. iii. Blocks have been allotted to central/state power utilities to improve domestic coal availability. CCAI Monthly Newsletter December 2017

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GOVERNMENT OF INDIA MINISTRY OF COAL RAJYA SABHA Q. No. 9. Bringing down import of coal by thermal plants 15.12.2017 SHRI N. GOKULAKRISHNAN

stitution of imported coal with domestic coal. In the last three years, the fall in thermal coal import for domestic coal based power plants is given in the table below:

Will the Minister of Coal be pleased to state :

Year

(a) whether it is a fact that Government is aiming to bring down to zero the coal imports of thermal power plants of Public Sector Undertakings in the current financial year;

2014-15

48.5

2015-16

37.1

(-) 23.50

2016-17

19.8

(-) 46.63

2017-18 (Apr-Oct)

9.6

(-) 26.71*

(b) whether it is also a fact that this move would reduce the country’s import bill by about ₹.17,000 crore; and (c) whether it is also a fact that Government is considering to convince private companies operating in the power sector to totally stop the import of thermal fossil fuel, if so, the steps taken in this regard? ANSWER MINISTER OF COAL IN THE MINISTRY OF COAL AND RAILWAYS (SHRI PIYUSH GOYAL ) A statement is laid on the Table of the House. Statement referred to in reply to parts (a) to (c) of Rajya Sabha Starred Question No.9 for answer on 15.12.2017 asked by Shri N. Gokulakrishnan.

Import by domestic coal Reduction in based power plants (in MT) import (in%)

(* reduction over the same period of 2016-17) (c) CIL has taken many steps for promotion of import substitution through: • Source rationalization of part linkage from higher grade coal sources, • Offer of coal, including higher grade coal, through various types of e-auction including Special Forward e-Auction, • Introduction of flexibility in terms of auction, e.g. flexi tenure of lifting, reduction of EMD and floor price to cater to requirement of various consumers including TPPs not having FSA with CIL sources, • Sanction of coal linkages under provisions of SHAKTI policy of the Government for meeting the demand of various categories of power utilities including IPPs.

(a) & (b) Domestic coal availability in the power plants has improved in the country during the last 2-3 years which has resulted in decline of thermal coal import by power plants. However, thermal power plants designed on imported coal do import and will continue to import coal for power generation.

Q. No. 46. Auction of coal linkages by CIL 15.12.2017

From 2015-16 onwards, Coal India Ltd. (CIL) has taken initiative for substitution of imported coal with domestic coal, and based on one-on-one interaction with power generators has devised strategy of sub-

(a) whether Coal India limited (CIL) has decided to make auction of linkages to ensure dry fuel supply to non-regulated sectors like steel and cement, if so, the details thereof; and

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SHRI R. VAITHILINGAM Will the Minister of Coal be pleased to state:

(b) whether auction of coal linkages would be for non-regulated sectors, if so, the details thereof? ANSWER MINISTER OF COAL IN THE MINISTRY OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL) (a) to (b) Coal India Limited, in accordance with policy dated 15.02.2016 issued by Ministry of Coal, has been conducting auction of coal linkages for non-regulated sector since June 2016. The sub-sectors of auctions are Sponge Iron, Cement, Captive Power Plants (CPP), Others, Steel (coking) and Others (coking). Salient Features of the Policy of Auction of Coal Linkages to Non-Regulated Sector are: i. Proportion of coal allocation between power and non-power sectors to continue at the same level as average proportion of the last five years i.e. 75% Power and 25% Non-power. The Ministry of Coal/ CIL may review the proportion as and when required. ii. All allocations of linkages/LoAs for non-regulated sector shall henceforth be auction based. The tenure of new Fuel Supply Agreements (FSAs) may be as decided by Ministry of Coal/ CIL, subject to a maximum of 15 years. There may not be premature termination of FSAs of non-regulated sector as of now. However, there will be no renewal of existing FSAs of non-regulated sector [except FSAs of CPSEs and Fertilizer (Urea)] which are maturing in 2015-16 onwards. iii. The existing FSAs with Central Public Sector Enterprises (CPSEs) may continue to be renewed on expiry. However, in case CPSEs require linkages over and above the existing linkages, they may participate in auction of linkage. iv. In the first tranche, the quantity corresponding to FSAs of non-regulated sector [except CPSEs and Fertilizer (Urea)] maturing in 2015-16 onwards and 25% of incremental CIL/SCCL (Singareni Collieries Company Limited) production during 2015-16 over 201415 may be put up for auction. v. Separate quantities shall be earmarked for sub-sectors of non-regulated sector. The sub-sectors shall compete within themselves. The sub-sectors could be Cement, Steel/Sponge Iron, Aluminium, and Others [excluding Fertilizer (Urea) sector], including their

Captive Power Plants (CPPs) etc. The Ministry of Coal may review the sub-sectors as and when required. vi. CIL will allocate/earmark coal from suitable source (rail/ road mode) within a subsidiary, as deemed fit. There shall be provision for third party sampling of coal supplied. vii. The methodology for auction of linkages shall be non-discriminatory Ascending Clock Auction where the system increases the price on the electronic platform till demand-supply equilibrium is established. There will be an initial reserve price and auction will be conducted on this reserve price. viii. If total demand is less than offered quantity, then all bidders will get coal at reserve price. ix. If total demand is more than offered quantity, then the price will be increased by the system and the process will continue till the demand-supply equilibrium is established. x. The price increment shall be determined based on a transparent computerized system without any manual interference. xi. Maximum bid quantity by a particular bidder shall not exceed the normative requirement of the End Use Plant. CIL shall chalk out annual or 6 monthly auction calendar. xii. Based on experience gained in the first tranche, the operational issues such as, the quantities, sectoral allocations and sub-sectoral earmarking, auction methodology and other operational details may also be appropriately reviewed The auction has been envisaged as a transparent system of linkage allocation which is based on competitive bidding. Various consumer friendly measures such as 3rd party sampling, exit option, no performance incentive, delivery from specified mine/siding, back-up mine in the event of Force Majeure, etc. have also been introduced. A total of 23.75 Mtpa was earmarked for Tranche-I out of which 22.14 Mtpa has been booked. The auction was followed by signing of Fuel Supply Agreements (FSA) for the booked quantity. The tenure of the FSA is 5 years which can be further extended by another 5 years on mutual agreement. Three tranches of linkage auction have been conducted till now. The sub-sector-wise performance report of Tranche-I, II & III of auctions is as under: CCAI Monthly Newsletter December 2017

| 31

Tranche – I (Jun - Oct’16)

Tranche – II (Jan - Jun’17)

Tranche –III (Sep - Nov’17)

Total (Tranche I, II & III)

Sub-sector

Quantity % gain booked (MTPA)

Sponge Iron

2.05

0.51%

4.29

10.10%

2.54

7.20%

8.88

7.55%

Cement

0.68

0.16%

0.77

0.90%

0.12

0.00%

1.57

0.56%

CPP

18.07

8.97%

8.18

14.85%

4.59

22.05%

30.84

12.68%

Others

1.34

0.76%

1.27

5.14%

0.67

10.60%

3.28

4.50%

Steel (coking)

0.22

0.00%

0.00

0.22

0.00%

Others (coking) --

0.04

0.00%

0.36

2.97%

0.39

2.68%

Total

6.95%

14.76

10.60%

8.28

13.37%

45.18

9.64%

22.14

* % gain over non-power notified price

Q. No. 51. Production, Demand and supply of coal 15.12.2017

(d) the steps being taken by Government to meet the demand supply gap for coal in the country?

SHRI PARIMAL NATHWANI

ANSWER

Will the Minister of COAL be pleased to state:

MINISTER FORCOAL AND RAILWAYS (SHRI PIYUSH GOYAL)

(a) the production, demand and supply of coal by the Coal India Limited (CIL) and its subsidiaries during the last three years and the current year, state-wise; (b) whether there is shortage of coal in the country, if so, the details thereof and the reasons therefor; (c) the plans to increase domestic production of coal for meeting the domestic demand; and

32 | CCAI Monthly Newsletter December 2017

(a) Demand of coal is not estimated separately for Coal India Limited (CIL). However, the subsidiary-wise and state wise production of coal for the last three years and current year are given as under:

(in million tonnes) Subsidiary/State 2014-15 2015-16 2016-17 Production Production Production

2017-18 upto Nov. 2017 (Provisional) Production

West Bengal

20.60

21.16

23.58

14.15

Jharkhand

19.40

19.05

16.93

9.58

ECL

40.01

40.21

40.52 23.74

West Bengal

1.05

2.56

2.14

0.93

Jharkhand

33.47

33.30

34.90

17.82

BCCL

34.51

35.86

37.04 18.75

Jharkhand CCL

55.65

61.32

67.05

31.61

Uttar Pradesh

14.96

12.69

16.06

10.70

Madhya Pradesh

57.53

67.54

68.04

48.11

NCL

72.48

80.22

84.10 58.80

Madhya Pradesh

5.79

6.63

5.23

2.69

Maharashtra

35.35

38.19

40.41

20.34

WCL

41.15

44.82

45.63 23.04

Madhya Pradesh

13.08

13.73

11.93

7.01

Chhattisgarh

115.19

124.21

128.08

80.28

SECL 128.28 137.93

140.00

87.30

Orissa, MCL 121.38 137.90

139.21

85.82

Assam, NEC 0.78 0.49

0.60

0.24

CIL 494.24 538.75

554.14

329.30

-2As per Annual Plan 2017-18 of Ministry of Coal, the all India demand of coal and production & supply coal by CIL during last three years and current years is given below:Year

2014-15

2015-16 2016-17 2017-18

Total all India demand (Mte)

822.13

836.73

838.32@

908.40#

Total CIL Production (Mte)

494.23

538.75

554.14@

329.30&

Total CIL Supply (Mte)

488.86

534.08

543.16@

367.91&

@ Provisional, # Estimated ,&Upto November, 2017

CCAI Monthly Newsletter December 2017

| 33

State-wise demand of coal is not estimated separately. (b) On account of enhanced production by CIL, the country has moved from a regime of coal scarcity to a coal surplus situation. The vendible stock of CIL has increased from 53.62 Mt. as on 01.04.2015 to 68.62 Mt. as on 01.04.2017. The off-take / dispatch of coal of CIL has also increased from 488.86 Mt in 2014-15 to 543.16 Mt. in 2016-17. (c) Production is likely to further increase due to planned enhancement in productivity and deployment of Heavy Earth Moving Machineries. Further, an exercise has been carried out by CIL to prepare

Q. No. 856 Exploration of new coal reserves 22.12.2017 SHRIMATI THOTA SEETHARAMA LAKSHMI Will the MINISTER OF COAL be pleased to state : (a) whether Government is taking up measures to expand coal exploration in the country, if so, the details thereof, if not, the reasons therefor; (b) whether Government has taken cognizance to the fact that India’s coal reserves will be exhausted in a few decades, if so, the reaction of Government thereto; and (c) the details of the steps being taken to address the issue? ANSWER MINISTER OF COAL AND RAILWAYS ( SHRI PIYUSH GOYAL) (a) In order to expand coal exploration in the country, apart from the Regional exploration taken up by Geological Survey of India, Ministry of coal is also funding exploration activities through two Central Sector Scheme namely: 1. Promotional (Regional) Exploration of Coal & Lignite 2. Detailed Exploration in Non-CIL/Captive Mines blocks

34 | CCAI Monthly Newsletter December 2017

a roadmap for achieving a coal production level of 1 Billion Tonnes by the year 2019-20. CIL has identified mines with a production capacity of 908 million tonnes so far. (d) The gap between demand and supply of coal cannot be bridged completely as there is insufficient domestic availability of coking coal and power plants designed on imported coal will continue to import coal for their production. However, the focus of the Government is to increase coal production to the extent possible by facilitating Environment & Forest clearances expeditiously, pursuing with State Government for assistance in land acquisition and coordinated efforts with Railways for movement of coal.

Promotional (Regional) Exploration is for identifying new coal resources, whereas the Detailed Exploration in Non-CIL/Captive blocks is to bring the resources in “Proved Category” which is suitable for Project Planning. In 2016-17, 1.04 lakh meters of Promotional (Regional) Drilling and 3.09 lakh meters of detailed drilling has been carried out. It has been projected that 1.17 lakh meters of Promotional (regional) drilling & 3.92 lakh meters of Detailed drilling will be carried out in 2017-18. (b)& (c): The total estimated quantum of coal resources in the country is 315.149 billion tonnes as per “The inventory of Geological Resources of Indian Coal” (as on 01.04.2017), prepared by the Geological Survey of India. The total coal extracted from the coalfields of India during 2016-17 is 655.31 million tonnes and since 1950 upto 2016-17 is around 14438.22 million tonne. Every year about 3 to 5 billion tonnes of resources are being added through fresh exploration to the Coal Inventory of India. At present rate of exploitation, coal reserves will last for considerable period.

Q. No. 859. Rise in import of coal from North America 22.12.2017 SHRI R. VAITHILINGAM: SATHYANANTH:

SHRIMATI

VIJILA

Will the Minister of COAL be pleased to state: (a) whether it is a fact that India’s coal imports from North America quadrupled to 2.1 million tonnes in October, 2017 from a year ago, the highest since January, 2015;

(b) whether it is also a fact that buyers are looking to boost purchases amid a shortage of the fuel;

(b) the existing mix of domestic production and imports of coking coal; and

(d) if so, the steps taken by Government in this regard?

ANSWER

ANSWER MINISTER OF COAL IN THE MINISTRY OF COAL AND RAILWAYS (SHRI PIYUSH GOYAL) (a) As per Directorate General of Commercial Intelligence & Statistics (DGCI&S), a small quantity of coal was imported (including Coal, Coke and Briquittes etc.) from USA during October, 2017 viz. 1.07 MT (against 0.36 MT imported in January, 2015). (b) to (d) As per the current import policy, coal is kept under Open General License (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty. However, Coal imports have fallen from 217.78 Mte in 2014-15 to 203.95 Mte. in 2015-16 and further to 190.95 Mte. in 2016-17. The trend of fall in import of coal has continued in 2017-18. As per (DGCI&S), during April-October, 2017-18, 118.86 Mte. (Provisional) of coal was imported as compared to 121.14 Mte. in the corresponding period of 2016-17 showing a decline of 1.9%. The fall in imports is largely on account of enhanced production by CIL.The vendible stock of CIL has increased form 53.47 Mt. as on 01.04.2015 to 68.42 Mt. as on 01.04.2017. The off-take / dispatch of coal of CIL has also increased from 488.86 Mt in 2014-15 to 543.16 Mt. in 2016-17. However, the gap between demand and supply of coal cannot be bridged completely as there is insufficient domestic availability of coking coal and power plants designed on imported coal will continue to import coal for their production.

Q. No. 1332 Steps to boost domestic production of coal 29.12.2017 SHRI SANJIV KUMAR Will the Minister of COAL be pleased to state: (a) the projected requirement of coking coal for the country by 2022;

MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) As per the Report of the Working Group on Coal & Lignite for formulation of 12th Five Year Plan (201217), the total projected requirement of coking coal was assessed at 105 MT for 2021-22. (b) Indigenous coking coal production and import of coking coal in the country during the last three years i.e. 2014-15 to 2016-17 and current year Upto September, 2017 is given below:Quantity in Million Tonnes Year

Domestic Import of Total Coking Production of Coking Coal# Coal Coking Coal*

2014-15 57.45

43.71

101.16

2015-16 60.89

44.56

105.45

2016-17 61.66 (Prov.)

41.64

103.30

2017-18 17.59 Upto Sep. 2017

22.61

40.20

Source *CCO and #DGCI&S (c) Coking coal resources in the country have limited occurrences and confined to the coal fields of Damodar Valley and certain parts of Sohagpur and Pench Coalfields. There has been no new find of coking coal deposits in the country during Regional/Promotion exploration undertaken in last several years. However, CMPDI has already taken up detailed exploration for proving coking coal resources in Jharia Coalfields (Singra, Kapuria & West Mahuda blocks), East Bokaro Coalfields (Chalkari Extension & Jaridih block), West Bokaro Coalfields (Loyio block), North Karanpura Coalfields (Badam dipside block), Ramgarh Coalfields (Ramgarh-II block) of Jharkhand and Sohagpur Coalfields (Chulia Bhulia East block) of Madhya Pradesh.

CCAI Monthly Newsletter December 2017

| 35

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OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

December, 2017

% Achievement

Target

Actual

CIL

58.9

54.6

SCCL

5.3

5.7

April - December, 2017

% Achievement

Target

Actual

92.8%

406.6

383.9

94.4%

106.2%

45.7

42.0

91.8%

Overall Coal Dispatch (in MT) Company

December, 2017

December, 2016

% Growth

April – December, 2017

April – December, 2016

% Growth

CIL

53.4

SCCL

5.96

51.5

3.8%

421.4

391.8

7.6%

5.98

-0.5%

46.7

42.7

9.4%

% Growth

April – December, 2017

April – December, 2016

% Growth

Coal Dispatch to Power Sector (in MT) Company

December, 2017

December, 2016

CIL

42.1

39.7

6.1%

333.2

304.2

9.5%

SCCL

4.9

5.1

-5.0%

38.8

36.5

6.3%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated December, 2017

Coal Qty. Allocated December, 2016

Increase over notified price

Coal Qty. Allocated April - December, 2017

Coal Qty. Allocated April -December, 2016

Increase over notified price

CIL

9.1

4.6

74%

40.8

41.4

66%

Special Forward E-auction for Power (in MT) Company CIL

Coal Qty. Allocated December, 2017

Coal Qty. Allocated December, 2016

Increase over notified price

Coal Qty. Allocated April -December, 2017

Coal Qty. Allocated April -December, 2016

Increase over notified price

1.21

27.4

38.3

25%

Exclusive E-auction for Non- Power (in MT) Company

Coal Qty. Allocated December, 2017

Coal Qty. Allocated December, 2016

Increase over notified price

Coal Qty. Allocated April -December, 2017

Coal Qty. Allocated April -December, 2016

Increase over notified price

CIL

10.8

4.35

28%

Special Spot E-auction (in MT) Company

Allocated December, 2017

Allocated December, 2016

Over notified price

Allocated April -December, 2017

Allocated April -December, 2016

Over notified price

CIL

0.35

6.26

20%

38 | CCAI Monthly Newsletter December 2017

CCAI Monthly Newsletter December 2017

| 39

270648.43

TOTAL

Source CEA

TOTAL

BHUTAN IMP

HYDRO

56.12

NUCLEAR

77.19

59.05

58.53

ACTUAL*

Dec-17

1229400

PROGRAM

THERMAL