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CCAI Monthly Newsletter

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Vol. XLVI No. 10 January 2018

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Published on : 28.01.2018 CCAI Monthly Newsletter January 2018

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From the Editorâ&#x20AC;&#x2122;s Desk The production of Coal India Limited is lower than the actual target in January. Though coal stock position at thermal power plants has improved, compared to the same period of last year, still the situation is unpredictable. To reduce the deficit of domestic coal, Coal Ministry has set a production target of 630 mt in 2018-19 by CIL which is 5% higher than 2017-18 production target. The decision of Union Government to open up coal sector for commercial mining by private entities may prove to be the game changer though the success story would depend largely on the socio-economic factors related to it. Not only power, but also cement and steel producers can access fuel more efficiently as per the guideline. The key features consist of allowing 100 percent FDI along with export of coal from India. Coal Indiaâ&#x20AC;&#x2122;s decision to move to the global standard of charging customers based on the actual consumption of the gross calorific value (GCV) of coal may be a win-win situation for both producer and supplier if the actual quality is maintained stringently. Subsidiaries are now empowered to fix their own floor price for e-auctions, which is expected to help the coal behemoth accrue higher return but may affect the consumers in dire need of supply. Recent hike in freight tariff which surfaced a day after Coal India raised prices by around 9 per cent has added to the woes of the respective customers. The revised freight charges which came into effect from January 15 also raised the power tariff around 20 per cent considering the two currently applicable additional charges. Happy reading.........

4 | CCAI Monthly Newsletter January 2018

CCAI Monthly Newsletter Vol. XLVI No. 10 January 2018

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.

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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

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MO/DD to be made in favour of “Coal Consumers’ Association of India” CCAI do not necessarily share or support the views expressed in this Publication.

40 |Overall Domestic Coal Scenario 41 |Energy Genaration Report 42 |Monthly Summary of Domestic Coal 43 |Monthly Summary of Imported Coal and Petcoke

44 |Global News 46 |Production and Offtake Performance of CIL and Subsidiary Companies CCAI Monthly Newsletter January 2018

CONSUMERS’ PAGE Present Coal Scenario Coal output of Coal India Limited has touched 56.69 million tonnes in January though the production target was fixed at 63.32 million tonnes. Its offtake was 53.70 million tonnes in the same month.

Consumers’ Concern 1. Coal Stock Position Although the coal stock position at thermal power plants has improved, compared to last year, the situation is still unpredictable. The country’s coal import increased by 12.4 per cent to 18.49 million tonnes (MT) in January, against 16.44 MT in the same month of the previous fiscal. The utilities anticipate a pick-up in demand in the summer months ahead. So, imports are likely to remain buoyant for the next couple of months. 2. GCV slippage repeatedly found Power Consumers are repeatedly complaining of GCV slippage from different areas of ECL and BCCL. In spite 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. Request for increase in Quantity by Rail in Linkage Auction Tranche IV Huge number of old FSAs from Non-power Sector would expire in 2018 from April onwards and there is also long pendency of rakes from different Subsidiaries of CIL. Therefore, consumers have urged for increase offer by Rail in Tranche IV Auction of Linkage for Non-power Sector. 4. Consumers seeking extension in exemption of advance payment against coal value to the Non-lapsable category In spite of best effort put by CIL and Subsidiaries, consumers could not get desired relief as there is huge pendency of rakes so far due to various reasons. Consumers have requested to extend the exemption of advance payment from April, 2018 till the arrears are cleared. 5. Disruption in coal supply from SECL to Non-power Sector There is meager supply of coal to the industries from SECL. Though the situation had improved around November 2017, it had again deteriorated and rake movement has come down to 4-5 rakes per day which is adding up to the surging arrears of more than 1500 rakes from SECL to the Non-power Sector. 6. Consumers urge for remaining 20% allotment of MSQ for the month of January, 2018 to Non-power Sector consumers against Linkage Auction Due to improved coal stock situation MCL had agreed

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to allocate the remaining 20% of MSQ for the month of January, 2018 against Linkage Auction to the Non-power consumers. But later on they had declined to accept documentation for road mode consumers. As most of the consumers have already deposited huge amount on account of 100% MSQ, road mode consumers have requested to allow their remaining quantity (20% of MSQ) for the month of January. 7. Consumer alleges imported Indonesian coal is cheaper than pithead price of coal of certain mines of WCL According to a reputed industry consumer, certain varieties of WCL coal supplied to industries are costlier than imported Indonesian coal of some grades (GCV). 8. 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 actual booked grades from other available sources or refund of EMD at the earliest enabling them to buy coal further. 9. 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. 10. 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 refund of excess CST amount deposited by them.

POWER THERMAL Coal India’s new pricing policy to cut power generation cost Coal India new pricing policy, which involves selling coal on the basis of total energy content in each consignment, is expected to bring down cost of power generation that would be passed on to consumers, said executives from the company. “Under the new policy, prices of seven grades have been reduced,” CIL chairman Gopal Singh told. “In some cases, prices have been reduced even to the extent of Rs 162 per tonne compared with present coal price chart. It would make power generation cheaper.” In its new coal pricing policy, which will come into effect from April, the monopoly has graded coal on the basis of total energy content. Each of these grades will have a different rate for one unit of energy within these slabs with higher prices for higher calorific value. For every 100 unit reduction in energy content measured in kilo calorie, prices would reduce by a minimum of Rs 19 per tonne for the lowest grade and a maximum of Rs 48 per tonne for the highest grade. “Deterioration in coal quality even by 1 unit of energy measured in kilo calorie will be addressed by the present system in contrast to the older system where the band width for a particular grade was 300 kilo calorie,” he said. According to a Coal India executive, there are nine slabs in the new system. For example, coal with total energy content varying between 3,101 kilo calorie per kg and 4,600 kilo calorie per kg will be billed at 23 paise per unit of energy. This means that the price of coal per tonne for this grade will vary between Rs 713 per tonne on the lowest side for the grade and Rs 1,058 per tonne on the highest side of the grade. The current price for this grade is fixed at Rs 886 per tonne as long as energy content per kg lies within the grade.

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NTPC wants more coal as stocks hit critical levels Though the situation of coal stocks at power plants is believed to have improved with the seasonal fall in electricity demand with the advent of winter, staterun power generation behemoth NTPC has flagged fuel shortage at a number of its plants. In a letter dated January 12 addressed to the secretary of the power ministry, Gurdeep Singh, CMD, NTPC, said the supply shortage “is leading to generation loss on account of coal”. Cumulative generation loss at the power plants of NTPC and its joint ventures reached 10.6 billion units (BU), the letter said. NTPC power plants at Mauda (2,320 MW), Farakka (2,100 MW), Kahalgaon (2,340 MW), Simhadri (2,000 MW) and Solapur (660 MW) were cited to have been facing severe coal shortage. As on January 11, all the above power plants had coal stocks which were not even sufficient to sustain for a day. NTPC power plants received 7.4 MT less coal than what was required in November and December. Stocks at thermal power plants across the country suddenly fell in August-November, with the sudden surge in demand from these stations. This happened because about 4 GW of wind, nuclear and hydel plants were not able to generate power due to climatic and maintenance issues.

Coal supply surge pulls down spot power prices Spot power prices have declined to about Rs 2.90 per unit from a high of Rs 5 per unit in early September as near-adequate availability of coal led to higher electricity generation. Analysts said prices may fall further and stabilise at about Rs 2.5 per unit. Improved coal supplies and reduced power demand in winter boosted inventory levels of the fuel at power plants. Coal stocks at plants are close to 13 million tonnes, enough to last for nine days now compared with six days in September-October.

With higher electricity generation by plants, demand for short-term power on the exchanges in November and December declined from the previous months. Short-term power prices fell to Rs 3.55 per unit in November and further to Rs 2.9 per unit. The difference between total buy and sell bids at the Indian Energy Exchange turned negative in November and for most of December, indicating a drop in demand for short-term power. On most days in December, half the power on offer remained unsold either due to lack of demand or constraints in the power grids, pulling down prices to below Rs 3.

Government may amend power act to levy hefty penalties on discoms The government is working on amendments to the Electricity Act to levy hefty penalties on power distribution companies for load shedding and make provisions for direct subsidy transfers by states to power consumers. The Union power ministry is aiming to introduce the Electricity Act amendment bill in the budget session of parliament. At present, the Act fixes universal service obligation on distribution licensees to provide electricity to all applicants and the penalty for non-compliance can extend to up to Rs 1,000 per day of default.

demand and overcapacity. Coal-based power plants generated 767 billion units (BUs) of electricity during April-December, which is 3.9% higher than the yearago. Since electricity cannot be stored, generation is the most robust indicator of demand. There has been a significant improvement in capacity utilisation of such plants as well. Plant load factor (PLF) in the April-December period was 63.8%, which is more than four percentage points higher than the corresponding nine months of FY17. “Residential demand, driven by consumer durables, remains a driver, though our industry interactions suggest even industrial demand has seen some uptick,” said a recent report by Jefferies India. State run NTPC is expected to gain significantly from rise in generation. The company produced 67.8 BU in Q3 — its highest ever quarterly generation till date, which is 10.4% more than the production in the corresponding quarter in FY17. “NTPC is estimated to report 15% year-on-year earnings growth following improvement in generation volumes on account of commercialisation of capacity,” a note by Edelweiss Securities said. The spike in spot electricity prices turned out to be good news for thermal power companies which sell electricity in short-term markets. Average rate of electricity in the Indian Electricity Exchange (IEX) in Q3 was Rs 3.5/unit, which is 95% more than more than the price of electricity in Q3FY17. “JSW Energy’s profits are expected to remain robust, led by a 4% growth in generation volumes on account of higher merchant sales,” Edelweiss said.

“If a distribution licensee fails to supply the electricity within the period specified ...., he shall be liable to a penalty which may extend to one thousand rupees for each day of default,” it says. “Nothing contained in Section 43 shall be taken as requiring a distribution licensee to give supply of electricity to any premises if he is prevented from so doing by cyclone, floods, storms or other occurrences beyond his control,” the Act adds.

Thermal power utilities seen reporting upbeat Q3 results The December quarter is expected to be encouraging for thermal power companies with gradual recovery in demand and higher electricity prices in the spot market. Analysts pointed out that the market scenario in Q3 should have provided some respite to coal-based power generating units, long mired by low capacity utilisation due to tepid rise in electricity CCAI Monthly Newsletter January 2018

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Coal India subsidiaries get power to set floor price for e-auctions Coal India board has empowered subsidiaries to fix their own floor prices for e-auctions, which is expected to help the monopoly get higher rates. Earlier, it had fixed a ceiling for floor prices. It was 20% for non-power consumers and 10% for power. “Subsidiaries have also been empowered to fix the periodicity of these e-auctions depending on market forces,” a senior Coal India executive told. Western Coalfields, a subsidiary, has been empowered to fix its reserve price on the basis of the cost of production of coal. Many of its mines are underground and have higher costs compared to other mines. Coal India has told its consumers that the upper cap is being removed immediately. The executive said subsidiaries are now free to fix any floor price, which could be more than 20% for non-power consumers and 10% for power consumers. If demand for a particular source of coal is very high, Coal India subsidiaries are now free to fix prices that could fetch them additional revenue. It may help Coal India improve realisations from e-auctions because coal supplied through e-auctions is always in demand from various segment of buyers who do not have a steady supply contract with Coal India. However, it is still cheaper than imports. Also, smaller consumers do not have the wherewithal to import coal.

Large power consumers may not have to bear cross-subsidy charges: RK Singh The government is planning to remove cross-subsidy charges levied on large power consumers, power minister RK Singh said, offering a major relief to industrial and commercial establishments. The minister said the government is planning to amend the national tariff policy, which provides for a maximum of 20% cross subsidy charges. “Some states are charging as high as 100%,” he said. “We want to do away with the cross-subsidy charges. Rather the states should give direct benefit transfers to the targeted consumers,” Singh said, speaking at a

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conference organised jointly by the Central Electricity Authority and Independent Power Producers Association of India. The Union power ministry will consult the state governments on the removal of cross-subsidy charges, he said. Singh also said the government plans to introduce a licence renewal mechanism for electricity distribution companies to keep a check on the power supply capabilities of the utilities. The proposal is likely to be part of Electricity Act amendment bill likely to be tabled in Parliament in the budget session, he said. As per the proposal, the distribution utilities will have to apply for renewal of their licences every five years. “Licences of discoms that do not have adequate longterm power tie ups will not be renewed,” Singh said. The amendment bill is likely to propose raising multifold the penalties on distribution companies for load-shedding and propose a direct benefit subsidy transfer mechanism by state governments to power consumers.

Government may consider import duty hike on certain power items The government may consider increasing import duty on certain items related to power, capital goods and chemicals sectors in the forthcoming Budget with an aim to boost domestic manufacturing, sources said. The move would also help promote the government’s ambitious ‘Make in India’ initiative, said the source, who did not wish to be named. Imports of cheap power equipment have been affecting domestic manufacturers as well as created issues for independent power producers in view of poor quality and after sales service. The Indian Electrical and Electronics Manufacturers’ Association (IEEMA) in its pre-Budget recommendations have asked the government to remove concessional basic customs duty on imports of certain items in the power sector. It has also said that various finished products of electrical industry attracts a basic customs duty, ranging from 7.5 per cent to 10 per cent. However, the same finished products are imported at a concessional basic customs duty of 5 per cent. The ‘Make in India’ initiative is aimed at making the country a global manufacturing hub.

RENEWABLES Budget 2018 expectations: Renewable energy industry wants tax cuts, more funds from Arun Jaitley The expectations of the renewable energy industry from the Budget includes extra capital allocation, discounts on taxes and duties, mechanism for timely payment from discoms and a support system for start-ups. The sector anticipates that the government would address issues which pose threat to investments in this area if it wants to have 175 GW of installed renewable power generation capacity by 2022. Research agency Edelweiss expects an additional infrastructure corpus of around Rs 10,000 crore could be created in this regard. Axis Capital sees possibilities of power transmission and distribution expenditure rising 20-25%. About Rs 10,600 crore was spent on such schemes in FY18. Budget 2018: The previous Budget had announced various tax and duty cuts on a number of components used to manufacture wind and solar energy equipment. It had also raised the allocation to the ministry of new and renewable energy to Rs 5,473 crore from Rs 4,360 crore. However, it discontinued the generation-based incentive scheme for wind powerfirms. “We hope that there are no negative surprises that might stagger this exponential growth. Additionally, while direct and indirect tax benefits from the renewable sector has been evoked, we do hope that the corporate taxes will be lowered in Budget 2018, which

is in line with the government’s vision,” said Nikunj Ghodawat, CFO, CleanMax Solar.

Modi will need at least $125 bn to fund his renewable energy dream India will need at least $125 billion to fund its ambitious plan to increase the share of renewable power supply in the country’s grid by 2022, a top government official told, underlining the immense financing challenge ahead. The South Asian nation is one of the world’s most important growth markets for renewable energy. Millions of Indians are not yet linked up to the power grid but as the country of more than a billion people prospers, it is experiencing surging demand. To put India’s $125 billion requirement in context, global corporate funding for the solar industry - the world’s fastest-growing electricity source - was a tenth of that amount in 2017 at $12.8 billion, research firm Mercom says. In 2015, India said investment of $100 billion in the seven years to 2022 would be needed to meet its renewable energy goals. Installed renewable power capacity is currently about 60 gigawats (GW), and India plans to complete the bidding process by the end of 2019/20 to add a further 115 GW of installed renewable energy capacity by 2022.

CCAI Monthly Newsletter January 2018

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India rejects US solar claim at WTO, explores new defence

come down from Rs 51,590 crore in 2015-16 to Rs 36,905 crore in 2016-17,” Power Minister R K Singh said in written reply to Lok Sabha.

India hit back at Washington’s latest legal assault on its solar power policies at the World Trade Organisation, rejecting a US legal claim and exploring possible new protection of India’s own solar industry. Last month the United States triggered a new round of litigation at the WTO, arguing that India had failed to abide by a ruling that it had illegally discriminated against foreign suppliers of solar cells and modules.

The Ujwal DISCOM Assurance Yojana (UDAY) was launched for the operational and financial turnaround of state-owned Power Distribution Companies (DISCOMs).

In a statement published by the WTO, India said it had changed its rules to conform with the ruling and that a US claim for punitive trade sanctions was groundless. “India underscores that the United States’ request is not a valid request,” the Indian statement said. It said Washington had skipped legal steps, failed to follow the correct WTO procedure, and omitted to mention any specific level of trade sanctions that it proposed to level on India, leaving India “severely prejudiced”. India would be vindicated if the proper process was followed, it said. “In view of the above, India strongly objects to the U.S. request of 19 December 2017,” it said. Renewable energy has become an area of severe trade friction as major economies compete to dominate a sector that is expected to thrive as reliance on coal and oil dwindles. India unveiled its national solar programme in 2011, seeking to ease chronic energy shortages in Asia’s third-largest economy without creating pollution. But the United States complained to the WTO in 2013, saying U.S. solar exports to India had fallen by 90 percent. The WTO judges agreed that India had broken the trade rules by requiring solar power developers to use Indian-made cells and modules. In a separate move that could protect its solar industry from global competitors, not only U.S. rivals, India told the WTO that it was considering the case for imposing temporary emergency tariffs on solar cells, modules and panels, after a petition from the domestic industry.

24 states under UDAY cut losses to nearly Rs 37,000-cr in FY’17 Government’s UDAY scheme has helped debt laden DISCOMs of 24 states to reduce losses to Rs 36,905 crore in 2016-17 from Rs 51,590 crore in the previous fiscal, Parliament was informed. “As per data furnished by the states, the aggregate net losses of DISCOMs participating in UDAY have

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The scheme aims to reduce interest burden, cost of power and power losses in distribution sector, besides improving operational efficiency of DISCOMs. The minister said the interventions under UDAY have yielded encouraging results. The participating states have achieved an improvement of one per cent in Aggregate Technical & Commercial (AT&C or distribution) losses and Rs 0.17 a Unit in the gap between Average Cost of Supply and Average Revenue Realised in 2016- 17, he said.

India is said to consider 7.5% tariff on imported solar panels India, the largest buyer of solar equipment from neighboring China, is considering a 7.5 percent tax on imported solar panels, according to government officials with knowledge of the situation. Such imports aren’t taxed now, but might be reclassified as motors, which are subject to the tariff, the officials said, asking not to be named until a final decision was taken. The finance ministry is considering the renewable-energy ministry’s request to tax panels imported for projects won under future solar auctions while exempting those already awarded, they said. The proposed change could imperil Prime Minister Narendra Modi’s ambitious goal of installing 100 gigawatts of solar energy by 2022, especially as developers have relied on low-cost equipment from China to push tariffs to among the lowest in the world. The South Asian nation bought a third of China’s $8 billion of shipments from January through September, according to BNEF research.

CCAI Monthly Newsletter January 2018

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DOMESTIC Coal India needs tight quality Coal India sees challenging times control to profit from new pricing ahead policy Coal India Ltd, which is struggling to meet coal proCoal India’s decision to move to the global standard of charging customers based on the actual consumption of the gross calorific value (GCV) of coal may work in the company’s favour only if it can control quality and assure supplies in the higher bracket of a said coal grade. The current pricing mechanism, according to a Coal India official, is based on considering the mid-point of the GCV range of a particular grade. Thus, if the miner supplies coal that is higher than the mid-point GCV, it loses revenue. Under the new mechanism, this would change. GCV is the amount of heat released by the complete combustion of a unit of natural gas or coal. To elucidate this fact, the official pointed out that G11 grade of coal has a GCV range of 4,000-4,300 kcal. The price of G11 has been fixed at Rs 955 per tonne considering the mid-point GCV to be 4,150 kcal.”Now, if we supply coal which is beyond 4,150 kcal, we lose money. However, if we supply coal based on this mid-point, the price is justified,” the official said. Under the new mechanism, which will be effective from the 2018-19 financial year, the consumer will be charged based on the actual GCV consumption, which eliminates the scope of losing revenue. However, the world’s largest miner needs to be cautious. Coal consumers have been complaining a lot about the quality of Indian coal alleging not only about grade slippages but pointing that the coal supplied is towards the lower end of the contracted GCV range. An official with the Coal Consumers Association (CCAI) said that although India has the world’s fifth-largest coal reserves at 308.80 billion tonnes, the coal seams in the country are laden with stone bands and layers. Thus, the deposits are not as pure or refined as is the case with Australia, South Africa or other producers.

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duction targets, foresees significant competition coming in from the private sector in the future, a top official of the company has said. “More challenging times are ahead. Soon, mines for commercial exploitation will be offered to the private sector and in the not-too-distant future, private sector production may turn out to be significant,” Coal India chairman Gopal Singh said in a closed door video address to employees of all subsidiaries while congratulating them on their promotions. The company has set a 600 million tonne coal production target for 201718. Coal India officers said it was for the first time that any chairman personally interacted with staff to congratulate them on their promotion and listened to problems faced by them first hand. In his address, Singh highlighted the need to gear up and meet the challenges ahead. Singh expressed concern over the rising cost of production for the miner and told his colleagues that in the future, when private players become active in commercial mining, the cost of production will become crucial for business. He asked the officers to give villagers their due in the mining areas and listen to their concerns. “The land belongs to the villagers. You must respect them and be polite and attempt to resolve their issues,” he said.

After price hike, Coal India turns into Street favourite Brokerages are upbeat on Coal India as the company raised its non-coking coal prices, with at least two brokerages upgrading the stock. The company’s board approved upward revision of non-coking coal prices with effect from January 9 and said that it will be applicable to all subsidiaries

including North Eastern Coalfields for regulated and non-regulated sectors. The price revision will help Coal India earn incremental revenue of Rs 1,956 crore for the balance period of the current financial year. Analysts said the price hike comes as a surprise and has improved visibility on earnings going forward. “Coal India has taken fairly large 10-11 per cent price hikes in thermal coal prices, which come as a surprise and significantly improve its earnings growth outlook,” said CLSA, upgrading Coal India shares to ‘outperform’ and raised target price by 29%.

coastal transportation of coal to increase to 63 million tonne per annum (mtpa) by fiscal 2023, from 32 mtpa as of fiscal 2017 as structural bottlenecks ease,” it said in a statement. The bulk of the coastal movement of coal in India happens along the eastern coast, from the mines of Mahanadi Coalfields, via the Paradip and Dhamra ports in Odisha, to power plants in Andhra Pradesh and Tamil Nadu.

Odisha demands revision of coal royalty and change in sharing Coal India annual production tar- pattern of disaster response fund get at 630 MT in FY’19: Govern- The state government demanded that the Centre should revise coal royalty and change the sharing ment The government said that the annual production target of state-owned CIL has been kept at 630 million tonnes (MT) for the upcoming fiscal. “As per Annual Plan proposal for 2018-19, the production target of CIL (Coal India) has been kept at 630 MT (million tonnes) with five per cent growth over the target of 2017-18,” Coal Minister Piyush Goyal said in a written reply to Rajya Sabha. Against the target of 408.6 MT, CIL produced 385.6 MT of coal till January 1 in the ongoing fiscal, the minister said. In the Annual Plan of CIL for 2017-18, the production target has been pegged at 600 million tonnes. From the production level of 554 million tonnes in 2016- 17, the PSU has envisaged to enhance its coal output to one billion tonnes by FY’20. CIL has identified mines with production capacity of 908 million tonnes so far. Considering the demand of coal from various segments, while finalising the Annual Plan of 201718, CIL was given the offtake target of 600 MT by the coal ministry.

pattern of State Disaster Response Fund (SDRF) to 90:10 from 75:25 between the Centre and the states. The demands were raised by finance minister Sashi Bhusan Behera while participating in the pre-budget consultation meeting convened by the Union Ministry of Finance in New Delhi. Behera said as per recommendations of 14th Finance Commission the sharing pattern of SDRF should be changed to 90:10 once GST is in place. As GST has been implemented from July 1, 2017, the sharing pattern between the Centre and the states should now be changed, he said. Stating that the royalty on coal was last revised by the Centre in April 2012, Behera said the royalty rate should be revised every three years. Therefore, the coal royalty revision is due since April 2015. “The Government of India should revise the royalty on coal immediately without further delay,” Behera said.

“In the period April 1, 2017 to December 31, 2017, offtake of 421.41 MT(provisionally) has been achieved,” the minister said. In a bid to achieve the annual target, CIL is required to increase its daily production to more than two MT during the remaining day of the ongoing financial year.

‘Coastal shipping of coal to double’ Coastal transportation of coal is expected to near double to 63 million tonnes per annum (MT) by in six years, Crisil Research said. “Crisil Research estimates CCAI Monthly Newsletter January 2018

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RAILWAY Fresh shock for coal users The woes of coal consumers refuse to ebb with the Railway Board tweaking freight tariffs for the fuel a day after Coal India raised prices by around 9 per cent. The revised freight charges, which come into effect from January 15, raise the base tariff around 20 per cent even as the two currently applicable additional charges have been removed. Under the revised tariff, a distance slab of 201-275km, for instance, will attract a tariff of Rs 618.40 per tonne for a trainload (usually 59 wagons) against Rs 512.10 per tonne at present. The highest slab of 3,491-3,500km will attract a tariff of Rs 3,815.10 per tonne for a trainload against Rs 3,159.50 per tonne at present. The Railway Board in a circular said it had decided to rationalise the coal and coke tariff structures for transportation by rail route. “The freight rate tables for the transportation of coal and coke by rail shall be applicable throughout the year. No busy season surcharge and development charge shall be levied on the transportation of coal and coke by rail,” the circular said. According to industry sources, the busy season surcharge of 15 per cent on the base tariff is currently applicable for nine months, excluding the three months of usually high rainfall (July-September) when mining activity is limited. A development charge of 5 per cent is applicable throughout the year. Both charges are add-ons over the base tariff.

Rail cargo volume set to grow 5% this fiscal After a gap of three years, the Railways may post nearly 5 per cent growth in cargo volume this fiscal, with coal contributing a little less than half of the total volume. During the first nine months of this fiscal, the Railways carried about 849 million tonnes cargo, registering a 4.8 per cent growth. According to sources, January-March being the peak period, the trend may gain momentum and the Railways will finish close to the targeted volume of 1,167 mt, against last year’s total of 1,108 mt. The volume of coal, which contributes 48-49 per cent of the total, increased 2.7 per cent; raw materials for steel plant, except iron ore, increased 6 per cent, and volume of steel cargo had shot up by a staggering 15 per cent. In comparison, steel consumers are less affected. Revenue from steel raw materials, except iron ore, moved up 10.7 per cent faster than the volume growth. However,

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the growth of revenue from steel products is lower (10.7%) than the volume growth.

What Indian Railways is planning for suspended section To tackle the issue of non-movement of freight, especially coal, and passengers on the Dhanbad-Chandrapura railway section in Jharkhand, the Indian Railways has planned to lay a diverted railway route. The proposal is set to be discussed by the Railway Board members. The move is expected to ensure steady fuel supply to coal-based power plants and prevent the repetition of low-coal stock scenarios in the future. According to railway sources, while a plan has been suggested by the transporter’s arm RITES, the ultimate alignment of the tracks will be decided by the railways and the project will be funded by Coal India (CIL). According to a railway official, the railways has also prepared a detailed project report for the diverted line. According to reports, two diverted lines — Nichitpur-Tundu and Matari-Telo — will be discussed during the meeting. The 34-km railway line between Dhanbad and Chandrapura was closed in June 2017 as the route was found unsafe, given the underground fire in the mines; it affected daily movement of 37 passenger and freight trains. While parts of the railway lines at both ends have been made operational to ferry passengers and operationalise one coal siding at Tundu, a critical 14-km stretch has remained closed. Bharat Coking Coal (BCCL) was compelled to allocate 8-10 rakes from its supply to Central Coalfields (CCL) due to the closing of the Dhanbad-Chandrapura line.

STEEL Steel Ministry in talks with railways to resolve rake issue The steel ministry is in talks with railways to ensure adequate availability of rakes for industries that have been saying the problem has led to shortage of raw materials at plants, according to Union minister Chaudhary Birender Singh. Railway rakes are those wagons which carry various raw materials like coal and iron ore to industrial plants. Coal-based steel, power and aluminium plants have been complaining against railways for raw material supply-related issues due to unavailability of adequate rakes. On being asked about the measures the steel ministry is

Government must ensure raw material supply to performing steel companies, says Naveen India Steel Ministry Seeks Aboli- Jindal tion of Met Coal Import Tax adopting to sort out the railway rake shortage issue, the minister said, “…this is a problem. We are talking to the Railways Ministry (in this regard),” Singh told.

India’s steel ministry is seeking to remove import tax on coking coal to soften the impact of rising costs on users of the key steel-making fuel and promote production of the alloy that’s crucial for Prime Minister Narendra Modi’s plan to boost domestic manufacturing. The ministry has written to the finance department to consider its request in the federal budget on Feb. 1, federal steel secretary Aruna Sharma said in an interview in New Delhi. Her department has also proposed removing taxes on ferro-chrome and ferro-nickel, ingredients used in making stainless steel. Benchmark prices of premium coking coal have risen 34 percent over the past year, after cyclone Debbie affected supplies from Australia, the biggest shipper of the commodity. Prices have remained high and may spike again if forecasts of another similar weather disruption come true, according to consultants Wood Mackenzie Ltd. and CRU Group.

India should export 6-7% of its steel production: Union steel minister India should set a target of exporting 6 to 7% of its total steel production, up from its present level of 1.5%, union steel minister Chaudhary Birender Singh has said. “There is no reason to be happy with 1.5% of export. In the next few years, Indian steel exports should increase to 6-7 per cent of total production,” Singh said at a meeting organsied by Bharat Chamber of Commerce. India’s export of total finished steel in India was up by 57.7% in April-October 2017 at 5.626 million tonnes over previous corresponding period. Singh said following protective measures taken by the government like the minimum import price and anti-dumping duty, steelmakers had been posting better results. This has also helped India emerge as a net exporter of steel, and imports had come down by 40-45%, he said. The minister also said the steel ministry was looking at a mechanism to help moderate volatility in prices of iron-ore price, a key steelmaking input.

The government should ensure that performing steel assets do not face any shortage of raw material, Jindal Steel and Power Ltd (JSPL) chairman Naveen Jindal said. “You see only three private major steel companies have not embarrassed their investors, the rest have been pulled to the NCLT,” Jindal told. The government must give priority in providing raw material to those steel companies that are not facing insolvency proceedings and regularly paying interest on debts, he replied to question related to the impact of rising prices of raw materials on his business. Insolvent firms do not pay any interest, nor are they able to service their debt and such insolvent firms can even sell their items at lower rates, Jindal added. “We are taking up this matter with the government that those companies which are giving the interest regularly must get uninterrupted supply of raw materials. I would say other ministries also, whether it is coal, railways, they must support them (performing companies) by meeting their requirement.

CEMENT JSW Cement plans to raise Bengal production capacity JSW Cement plans to increase the production capacity in West Bengal from 2.4 mtpa to 3.6 mtpa besides a captive power plant in the same location, a top company official said. “The current installed capacity at the Salboni plant is 2.4 mtpa. We plan to build another 1.2 mtpa capacity for which another Rs 300 crore will be spent”, MD of JSW Cement Parth Jindal told. The construction would start six months from now, he said. The company has already started commercial production at Salboni in August, Jindal said, adding an investment of Rs 800 crore had gone to build the 2.4 mtpa capacity. Presently, the total installed capacity of JSW Cement pan-India stood at 11.6 mtpa, he said.

CCAI Monthly Newsletter January 2018

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With Best Compliments From:

Sharda Ma

( )

COAL MERCHANTS, IMPORTERS & HANDLING AGENTS INDIA SOUTH AFRICA INDONESIA SINGAPORE HONG KONG NIGERIA

UGF 1& 2, Kanchenjunga Building, 18 Barakhamba Road, New Delhi-110001, India P : +91 11 23354046/47 F : +91-11-23354047 E : corporate@shardamaa.com W : www.shardamaa.com

GLOBAL South African coal producers seeing Pakistan as destination for exports Sellers of South African coal are increasingly looking to the Pakistan import market as increasing demand there helps supplement the withdrawal of Indian buyers from imported coal. Exports of thermal coal from South Africa to Pakistan were 3.37 million mt in 2014, 3.72 million mt in 2015, and 4.92 million mt in 2016, according to customs data collected by Platts. January-November 2017 exports almost doubled to 7.95 million mt, giving Pakistan an 11.02% share of South African exports, having been 4.52% in 2014.

by April 2019. The terminal handled 907 ships last year, sending 81% of SA’s coal to Asia, with India the largest buyer, importing 36-million tonnes, followed by Pakistan and South Korea each taking between 8-million and 9-million tonnes. Europe accounted for 10% of SA’s exports and African countries 8%. The previous record was in 2015 with exports of 75.4-million tonnes. A year later and exports dropped to 72.6-million tonnes as demand for thermal coal slowed. Transnet Freight Rail also had a strong performance, delivering 75.6-million tonnes, the highest since operations began in 1976 with just 12-million tonnes.

China coal futures hit record high Richards Bay eyes new record for as utilities warn of shortages coal exports China’s thermal coal futures hit record highs after Richards Bay Coal Terminal, the third-largest facility of its kind in the world, hopes to set a fresh export record this year as a R1.3bn equipment replacement programme comes to an end, freeing up storage space and improving efficiency. In 2017, the terminal notched up a number of records in the volume of coal it received by rail from the inland coalfields in Mpumalanga and the tonnages put on ships for buyers in Asia, Europe and Africa. Coal exports are a larger earner of foreign currency for SA than gold. The terminal notched up its best exports yet of 76.47-million tonnes despite unusually adverse weather closing the port for 38 days during the year and a programme to replace two of four machines that load coal onto ships, as well as losing 5% of yard space to build new stacking and reclaiming machines. The machines will be commissioned

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four top utilities warned of potential heating and electricity shortages and as the worst blizzards this winter continued to blast some central and southern provinces. Last week, China’s State Power Investment Corp (SPIC), China Datang Corp, China Huaneng Group and China Huadian Corp asked the government to boost supplies of coal and temper a months-long rally in prices. The most-active futures were up 1.1 percent at 677.2 yuan ($107.04) per tonne at 10:41 a.m. (0241 GMT), after earlier touching 679.6 yuan, their highest since the contract began in 2015. Thermal coal futures have jumped over 10 percent this year, extending a months-long rally, as utilities rush for supplies to deal with soaring power demand as cold weather sweeps across swathes of the nation.

Why China Can’t Shake Its Coal Dependency Thanks to Mother Nature and administrative decision-making, China’s drive to reduce the use of coal has hit a roadblock. You see, China entered 2017 aggressively trying to reduce coal capacity. The state-run Xinhua News even said last November that China was on track to cut its total number of mines to 7,000 by 2018. But despite having a wealth of different energy sources – from (undeveloped) natural gas and oil to renewable sources like wind and solar – China remains dependent upon coal for most of its power generation and heat. To keep up with expanding demand from an expanding population, China on average is bringing a new coal-fired energy plant on line every week. Compounding the situation, this week, Beijing announced a reduction in overall production from some of the larger national coal mines. China’s move to wean itself off of its dependence on coal is important. It’s a testament to the country’s commitment to fixing its deteriorating environmental conditions. Sadly, it turns out that the drive is easier to announce than to pursue.

Indonesia completes contract amendments with coal miners

dopo Energi Batubara, a unit of Bumi Resources. “With these amendments companies will also benefit in the long run, if we sign while the coal price is high. If (prices are) low, it’s harder to sign,” Minister for Energy and Mineral Resources Ignasius Jonan said at the signing ceremony. Under the amendments, coal mining companies agreed to pay 13.5 percent royalties on coal sales as a cash lump sum. .

Mercator restarts coal operations in Indonesia Mercator informed the exchanges that it has restarted coal operations at its mining site in Indonesia. The operations were disturbed for a large part of the third quarter due to change in the management team, it said in the notice. The new management has now taken complete charge and expects operations to reach optimum levels by March 2018, it further added. The stock of Mercator closed at ₹45.4, a gain of about a per cent, over the previous day’s close on the NSE.

UK renewables created three times the power of coal in 2017 Sheffield University and BM Reports have released statistics showing that the renewable sector in the United Kingdom outperformed coal power generation more than three-fold in the year up to December 12.

Indonesia’s mining ministry signed amended contracts with 18 coal mining companies, including PT Adaro Indonesia, as part of a shift towards a new mining permit system it expects to boost government revenue.

The UK government previously called for the phasing out of coal power that doesn’t employ carbon capture by 2025 which, alongside a decline in investment, has encouraged alternative energy sources.

Indonesia, the world’s biggest thermal coal exporter, has now amended the contracts of all of its 68 coal mining companies, marking a victory for the government after earlier resistance from some miners to adopt the new terms.

In fact coal-fired power stations now produce less than 7% of the UK’s energy, a heartening statistic for environmentalists and the renewable energy sector despite concerns that an increased focus on natural gas as a power source will offest the environmental benefits of coal’s decline.

Indonesia’s 2009 mining law requires companies to transfer from so-called contracts of work, long-term agreements with specific rules including on taxes, to newer special mining permits that generally follow the prevailing law. Along with Adaro, Indonesia’s second-biggest coal miner, the other companies that signed included PT Santan Batubara, a unit of Indika Energy, and PT Pen-

Meanwhile in Australia AGL has announced that their proposed renewable replacement option for the coalfired Liddell Power Station would be more affordable on a wholesale basis, a major milestone for renewable energy after the issues of energy security and affordability dominated Australian political debate in 2017.

CCAI Monthly Newsletter January 2018

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Coal production drops the most since Trump was inaugurated

up coal demand but may have slowed production, according to National Mining Association spokesman Luke Popovich.

Coal production dropped the most since President Trump was sworn into the Oval Office nearly one year ago, according to new federal data issued.

Japan to allow new coal power plant but demand cuts elsewhere

The plunge occurred at the end of last year on Dec. 30, falling 36 percent compared to the day after Trump was sworn in as commander in chief.

Chugoku Electric Power will need to offset emissions from a planned coal-fired power plant through such steps as shutting down old fossil-fuel capacity, Japan’s environment minister said, warning that the project threatens the nation’s ability to meet its climate goals.

Trump has boasted that coal production is up since he took office. But the Energy Department’s analysis arm showed that it has mostly ebbed and flowed all year, with a huge drop occurring over the holidays. The day after Trump took office, U.S. coal production jumped by 1 million short tons from 15.4 million short tons on Jan. 14, 2017, to 16.4 million metric tons on Jan. 21, according to the Energy Information Administration, the Energy Department’s independent statistical and analysis wing. Production then varied through the year before plummeting to 10.4 million short tons on Dec. 30, 36 percent less than Jan. 21, when Trump took office, EIA data showed. It picked up a bit by the end of the week ending on Jan 6 to end at about 12.1 million short tons, which is about 10 percent lower than the same week last year. One explanation could be the Arctic chill that drove

22 | CCAI Monthly Newsletter January 2018

Chugoku Electric plans to break ground on the 1 million kilowatt plant in the western prefecture of Shimane this November and bring it online in 2022. Coal accounts for nearly 60% of the company’s power generation -- double the national average. Nakagawa said he will let the project go forward but demand steps to mitigate its impact, such as scrapping or suspending old, inefficient fossil-fuel facilities or limiting the new plant’s use. Under the Paris climate change accord, countries including Japan agreed to aim for net zero greenhouse gas emissions by the end of the century. But sluggish progress on restarting nuclear plants after the 2011 Fukushima Daiichi disaster has spurred power com-

panies to build new plants using such cheaper fuels as coal. Japan’s openness to coal as a power source has met with international criticism.

in 2018 and to 202 million mt in 2019. The 2018 and 2019 shipment figures are up from the department’s previous quarterly expectations, which had pegged the volumes at 199 million mt for both years.

Australia revises up thermal coal benchmark price, export fore- Spanish Government Takes Steps casts to Support Coal-fired Generation The Australian government revised up its thermal coal benchmark price for Japanese Fiscal Year 2018 (April-March), while also improving its export expectations for the country’s coal. In the government’s Resources and Energy Quarterly report, the JFY 2018 benchmark price is now projected to settle at $79/mt, lower than the JFY 2017 price of $84/mt but $5/mt higher than the forecast provided in its previous quarterly report. “Prices are expected to ease through 2018 and early 2019, as supply rebounds and demand moderates,” it said. The Newcastle FOB spot price is expected to drop by 12% to an average of $77/mt in 2018 and by further 6% to $70/mt in 2019. The JFY 2019 benchmark price is estimated at $74/mt, which is up from the previous forecast of $71/mt. The country’s exports are expected to be fairly steady, moving from 201 million mt in 2017 to 203 million mt

Iberdrola’s global strategy to close its remaining coalfired power plants has met with government opposition in its home country of Spain. Álvaro Nadal, Spain’s energy minister, recently reiterated to Iberdrola that the government’s opposition to closing the coal plants is firm. In the wake of the government’s action, the European Commission has begun investigating Spain’s state aid for coal-fired power plants to determine whether it is in line with European Union (EU) rules, according to EURACTIV Spain. Environmental group WWF Spain in a statement said the government is trying a “desperate move” to block the country’s transition to a “100% renewable and fossil-free future.”

Domestic competition, weak demand limit Turkish petcoke imports High freight rates combined with lower offers from domestic producers have kept Turkish petcoke imports uncompetitive amid weak demand, sources said. Domestic sources of petcoke have been offered at $107-$108/mt. Those lower prices compared with imported petcoke, which adds $8-$10 for taxes, port fees and local transportation, a Europe-based trader said. S&P Global Platts assessed Supramax petcoke freight rates from Houston to Aliaga, Turkey at $21/ mt 25 cents lower than the highest price of 2017, which was set in mid-December. Offer prices for mid-sulfur US Gulf Coast material were being heard between the low $80s and $85/mt. Platts assessed CIF Turkey 5% sulfur petcoke at $102/mt, unchanged week on week, based on a general market survey. A second trader said he expects the price to come down in the coming days as freight rates drop. Interest will pick up in the next few days as buyers return from holidays and look to re-establish stockpiles, he said. CCAI Monthly Newsletter January 2018

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GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA Q. No. 221. New Coal Allocation Policy. 03.01.2018 SHRI ADHALRAO PATIL SHIVAJIRAO: DR. PRITAM GOPINATH MUNDE: Will the Minister of COAL be pleased to state: (a) whether the Government has implemented/introduced new coal allocation policy-2017 for the power sector and if so, the details and the objectives thereof; (b) whether availability of domestic coal in the power plants has improved in the country during the last two years and if so, the extent to which it has improved; (c) whether the Government has decided/planned/ started to substitute imported coal with domestic coal; (d) if so, the details thereof and the initiatives taken by the Government/Coal India Limited (CIL) in this

26 | CCAI Monthly Newsletter January 2018

regard during the last one year and the success achieved as a result thereof; and e. whether CIL has started supplying domestic coal against the requirement of imported coal for power plants and if so, the details thereof?

ANSWER MINISTER OF RAILWAYS AND COAL ( SHRI PIYUSH GOYAL ) A statement is laid on the table of the House. Statement referred to in reply to parts (a) to (e) of Lok Sabha Starred Question No. 221 for answer on 03.01.2018 asked by Shri Adhalrao Patil Shivajirao and Dr. Pritam Gopinath Munde. (a) Yes Madam. Ministry of Coal vide letter No. 23011/15/2016-CPD/CLD dated 22.05.2017 has issued a new and more Transparent Coal Allocation Policy for Power Sector, 2017 – ‘SHAKTI’ (Scheme

for Harnessing and Allocating Koyala (Coal) Transparently in India). A copy of the policy guidelines dated 22.05.2017 is attached with the answer. The main objectives of this policy are to make coal available to all the Thermal Power Plants of the country in a transparent and objective manner and at the same time ensure that the benefits of linkage coal are transferred to the end consumers. The main features of this policy are: 1. FSA to be signed with the existing LoA holders after ensuring that plants are commissioned, respective milestones met, all specified conditions of LoA fulfilled within specified timeframe, and nothing adverse is detected against the LoA holders, 2. To continue to supply coal to 68,000 MW capacity as per the decision of CCEA dated 21.06.2013 @75% of ACQ. The supply may be increased in future based on coal availability, 3. Actual coal supply allowed also under medium term PPAs to be concluded in future besides long term PPAs, 4. The pending applications for LoA need not be considered and may be closed. 5. Linkages may also be granted at the notified price to State/Central Gencos/their JVs. 6. Coal linkages to power producers/IPPs having already concluded long term PPAs based on domestic coal to be given on notified price to successful bidders. The basis of the bid being non-zero levellised value of discount on the tariff. The discount in tariff so quoted has to be passed on to the procurer, through a supplementary agreement between the developer and the procurer to be approved/adopted by the appropriate Regulatory Commission. 7. Coal linkages may also be earmarked for fresh PPAs, by pre-declaring the availability of coal linkage with description, to the States/Discoms which may undertake tariff based competitive bidding for longterm and medium-term procurement of power and recommend grant of these linkages to successful bidders. Similarly, power requirement of group of States can be aggregated and successful bidder in tariff based competitive bidding may be recommended grant of earmarked linkage. 8. Linkages shall be granted for full normative quantity to Special Purpose Vehicle (SPV) of Ultra Mega

Power Projects under Central Government initiative through tariff based competitive 9. Linkages to IPPs having PPA based on imported coal but without linkage shall be on the basis of a transparent auction mechanism. 10. Future coal linkage on auction basis for IPPs without PPAs that are either commissioned or to be commissioned. (b):

Year

Receipt of domestic coal at power plants (in MT)

Increase in receipt of domestic coal as compared to last year (in %)

2013-14

418.1

2014-15

450.3

7.70

2015-16

481.3

6.88

2016-17

494.9

2.82

2017-18 (Apr- Nov)

342.7

9.5 *

* In 2017-18 (April-Nov, 2017), the receipt has been 342.7 MT against 312.9 MT in the corresponding period of the last year, which is a growth of 9.5%. (c) to (e) 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. In view of the buoyant production and adequate availability of domestic coal, it has been an endeavor to reduce the import of coal by power plants and to substitute it with domestic coal supply. In this regard, Coal India Limited (CIL) has taken the following steps for promotion of substituting imported coal with indigenous coal i.) Rationalization of sources by part of coal supply coming from sources of higher grade coal, ii.) Offer of coal from various sources including higher grades were offered through various types of eAuction schemes including Special Forward eAuction for Power Sector iii.) Taking initiatives like flexible tenure of coal lifting, reductions of EMD and of floor price in coal auction for power sector,

CCAI Monthly Newsletter January 2018

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iv.) Sanction of coal linkages under SHAKTI policy. As reported by CEA, there has been reduction of coal import by domestic coal based power plants from 37.2 MT in 2015-16 to 19.9 MT in 2016-17. In 201718 (till 30.11.2017), import by such power plants has been 11.07 MT against 14.53 MT during the same period in 2016-17. The coal import by imported coal based plants in 2017-18 (till 30.11.2017) has been 27.7 MT as against 30.3 MT during the same period in the last year, recording a reduction of 2.6 MT. CIL has offered domestic coal for substitution of import to many power plants within and above the Annual Contracted Quantity (ACQ). TANGEDCO, NTECL, Vallur and NTPL Tuticorin have already executed side agreements with Eastern Coalfields Limited (a subsidiary company of CIL) for supply on best effort basis of 2.5 MT, 1.0 MT and 1.0 MT coal respectively, over and above ACQ as import substitution. 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.

IMMEDIATE No. 23011/15/2016-CPD/CLD Government of India Ministry of Coal Shastri Bhawan, New Delhi, the 22â&#x20AC;? May, 2017 To (i) Chairman-cum-Managing Director, Coal India Limited, Coal Bhawan, New Town, Rajarhat, Kolkata-700156. (ii) Chairman-cum-Managing Director, SCCL, PB No. 18, Khairatabad, Hyderabad, Telangana. Subject: Signing of Fuel Supply Agreement (FSA) with Letter of Assurance (LoA) holders of Thermal Power Plants- Fading Away of the existing LoA-FSA Regime and Introduction of a New More Transparent Coal Allocation Policy for Power Sector, 2017SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India). Sir, The proposal of Coal linkages Allocation Policy for Power Sector has been under examination in this

28 | CCAI Monthly Newsletter January 2018

Ministry. With the approval of Cabinet Committee on Economic Affairs (CCEA), the following policy guidelines for allocation of Coal linkages to Power Sector have been decided: Under the old regime of LoA-FSA: FSA may be signed with the pending LoA holders after ensuring that the plants are commissioned, respective milestones met, all specified conditions of the LoA fulfilled within specified timeframe and where nothing adverse is detected against the LoA holders. The outer time limit within which the power plant of LoA holders must be commissioned for consideration of FSA shall be 31.03.2022, failing which LoA would stand cancelled. Coal supply to these capacities may be at 75% of ACCT. The coal supply to these capacities may be increased in future based on coal availability. The 583 pending applications for LoA need not be considered and may be closed. The capacities totaling about 68,000 MW as per the decision of CCEA dated 21.06.2013 would continue to get coal at 75% of ACQ even beyond 31.03.2017. The coal supply to these capacities may be increased in future based on coal availability. About 19,000 MW capacities out of the 68,000 MW could not be commissioned by 31.03.2015. Coal supply to these capacities may be allowed at 75% of ACQ against FSA provided these plants are commissioned within 31.03.2022. The coal supply to these capacities may be increased in future based on coal availability. Actual coal supply to power plants shall be to the extent of long-term PPAs with DISCOM/State Designated Agencies (SDAs) and medium term PPAs to be concluded in future against bids to be invited by DISCOMs as per bidding guidelines issued by Ministry of Power. With these, the old regime of LoA-FSA would come to finality and fade away. The following shall be considered under a New More Transparent Coal Allocation Policy for Power Sector, 2017-SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India): CIL/SCCL may grant Coal linkages for Central Government and State Government Gencos at the notified price of CIL/SCCL. Similarly, coal linkages may

be granted for JVs formed between or within CPSUs and State Govt./PSUs. The recommendations shall be made by Ministry of Power. CIL/SCCL may grant coal linkages on notified price on auction basis for power producers/IPPs having already concluded long term PPAs (both under section 62 and section 63 of The Electricity Act, 2003) based on domestic coal. Power producers/IPPs, participating in auction will bid for discount on the tariff (in paise/unit). Bid Evaluation Criteria shall be the non-zero Levellised Value of the discount (applying a pre-notified discount rate) quoted by the bidders on the existing tariff for each year of the balance period of the PPA. Ministry of Coal may, in consultation with Ministry of Power, work out a methodology on normative basis to be used in the bidding process for allocation of coal linkages to IPPs with PPAs. The discount by generating companies would be adjusted from the gross amount of bill at the time of billing, i.e., the original bill shall be raised as per the terms and conditions of the PPA and the discount would be reduced from the gross amount of the bill. The discount shall be computed with reference to scheduled generation from linkage coal supplied under this auction. This would be applicable to both the PPAs contracted under Section 62 as well as Section 63 of the Electricity Act, 2003. Accordingly, PPA may be amended or supplemented mutually between the developer and the procurer to pass on the discount to the procurer and the approval of the Appropriate Commission obtained, as per the provisions of the PPA or Regulations. FSA shall be signed with the successful bidders after the terms and conditions for signing of FSA are met and the Appropriate Commission has approved the amendment or supplement to the PPA. CIL/SCCL may grant future coal linkages on auction basis for power producers/IPPs without PPAs that are either commissioned or to be commissioned. All such power producers/lPPs may participate in this auction and bid for premium above the notified price of the coal company. The methodology for bidding of linkages shall be similar to the bidding methodology in the policy on auction of linkages of Non-Regulated Sector dated 15.02.2016. Coal drawal will be permitted only against valid long term and medium term PPA with Discoms/State Designated Agencies (SDAs), which the successful bidder shall be required to procure and submit within two years of completion of auction process.

In case of the commissioned capacities, FSA shall be signed with the successful bidders after completion of the auction process provided that the standard terms and conditions for signing of FSA are met. In case of others, a Letter of Assurance (LoA) may be issued by CIL/SCCL to the successful bidder and FSA shall be signed after commissioning of the unit and fulfilling other conditions of the LoA. Further, if the power producer/IPP, does not start drawing the coal within two years of submission of the PPA, the FSA or the LoA, as the case may be, shall stand terminated. Coal linkages may also be earmarked for fresh PPAs, by pre-declaring the availability of coal linkage with description, to the States. States may indicate these linkages to Discoms/SDAs. The States/Discoms may, based on such linkages, undertake tariff based competitive bidding for longterm and medium-term procurement of power as per the guidelines issued by Ministry of Power and may recommend grant of these linkages to successful bidders. In case of the commissioned capacities, FSA shall be signed with the successful bidder after completion of the auction process. In case of the likely to be commissioned capacities, a Letter of Assurance may be issued by CIL/SCCL to the successful bidder and FSA shall be signed on commissioning of the unit. The successful bidder shall be required to meet the conditions specified in the Letter of Assurance and FSA. The existing FSA/LoA holders may also participate in the competitive bidding for PPA and, if successful, shall surrender proportionate quantity of the FSA/LoA for the corresponding tenure; or The States/Discoms may recommend grant of the earmarked linkages to capacities that are covered under exceptions and proviso clauses of para 5.2 of the Tariff Policy dated 28.01.2016. A Letter of Assurance may be issued by CIL/SCCL to such capacities and FSA shall be signed on commissioning of the unit. Provided The priority between (iv) I and (iv) II above will be decided by the State Government concerned considering its public interest and based on its requirements. The quantity remaining unutilized for 2 years continuously shall lapse. Detailed policy guidelines for sub para (iv) shall be formulated by Ministry of Power. Power requirement of group of States can also be agCCAI Monthly Newsletter January 2018

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gregated and procurement of such aggregated power can be made by an agency designated by Ministry of Power or authorized by such States on the basis of tariff based bidding. Coal linkages will be earmarked for such agencies by pre-declaring the availability of coal linkage with description, based on which such agency will undertake tariff based competitive bidding for long-term and medium-term procurement of power and recommend grant of these linkages to successful bidders. The methodology in this regard shall be formulated by Ministry of Power. Linkages shall be granted for full normative quantity to Special Purpose Vehicle (SPV) incorporated by nominated agency for setting up Ultra Mega Power Projects (UMPP) under Central Government initiative through tariff based competitive bidding under the guidelines for determination of tariff, on the recommendation of Ministry of Power. Ministry of Coal in consultation with Ministry of Power may, subject to the availability of coal and the condition that such supply does not adversely impact the availability of coal for plants based on domestic coal, formulate a detailed methodology of a transparent bidding process for allocating coal linkages to IPPs, having PPAs based on imported coal, with full pass through of cost saving to consumers. Further, the successful bidder would not be allowed to claim any upward revision in the tariff on account of such coal linkages. 2. Since the Competent Authority has approved the proposal of Coal linkages Allocation Policy for Power Sector as mentioned in para 1 above, policy guidelines are circulated to all concerned for further action. The action taken report shall be sent to this Ministry from time to time.

Secretary, Ministry of Mines, Shastri Bhawan, New Delhi Secretary, Department of Financial Services, Jeevan Deep Building New Delhi. 11. Prime Ministerâ&#x20AC;&#x2122;s Office, (Kind Attn. - Shri A. K. Sharma, Joint Secretary), South Block, New Delhi. Cabinet Secretariat (Kind Attn. â&#x20AC;&#x201D; Shri S. G. P. Verghese, Director), Rashtrapati Bhawan, New Delhi. Director (Marketing), Coal India Ltd. Kolkata, Coal Bhawan, New Town, Rojarhat, Kolkata-700156. ED/Coal Movement, SCCL, PB No. 18, Red Hills, Khairatabad, Hyderabad, Telengana CMD, CMPDI, Gondwana Place, Kanke Road, Ranchi, Jharkhand. Chairman, Central Electricity Authority, Sewa Bhawan, R.K. Puram, New Delhi. Copy also to: Chief Secretaries of all States/UTs Copy for information to: 1. OSD to MoS(I/C), Coal, 2.PS to MoS (VC), Coal, power & N&RE, 3. PSO to Secretary, Ministry of Coal, 4.PPS to Additional Secretary, Ministry of Coal, 5. Sr. PPS to Joint Secretary (RPG), Ministry of Coal, 6. PS to JS(VB), Ministry of Coal, 7. PPS to JS (RKS), Ministry of Coal, 8.PS to JS & FA, Ministry of Coal, 9. PS to Adviser (Projects), Ministry of Coal, 10. PS to Economic Adviser, Ministry of Coal, 11.PS to Director, CPD, Ministry of Coal, 12. Shri G.K. Vashishtha, GM(S&M), CIL, Laxmi Nagar, Delhi. Copy to Director, NIC, M/o Coal with the request to place the same on the website of this Ministry. (A. K. Das) Under Secretary to the Govt. of India

(A. K. Das) Under Secretary to the Govt. of India Copy to: Secretary, Ministry of Power, Shram Shakti Bhawan, New Delhi. Secretary, Department of Economic Affairs, Ministry of Finance, North Block, New Delhi. CEO, NITI Aayog, Yojana Bhawan, New Delhi. Chairman, Railway Board, Rail Bhawan, New Delhi Secretary, Ministry of Steel, Udyog Bhawan, New Delhi Secretary, Department of Industrial Policy and Promotion, Udyog Bhawan, New Delhi Secretary, Ministry of Law and Justice, Department of Legal Affairs, Shastri Bhawan, New Delhi Secretary, Ministry of Chemicals and Fertilizers, Department of Fertilizers

30 | CCAI Monthly Newsletter January 2018

Q. No. 227. Coal Washeries. 03.01.2018 SHRIMATI BHAVANA PUNDALIKRAO GAWALI PATIL; SHRI KRUPAL BALAJI TUMANE Will the Minister of COAL be pleased to state: whether the Government has set up coal washeries in coal regions of the country including Maharashtra, Uttar Pradesh, Karnataka and Gujarat; if so, the details thereof; whether each of the said washeries is functional at present, if so, the details thereof and if not, the rea-

sons therefor; whether the Government propose to increase the number of coal washeries in these States; and if so, the details thereof and if not, the reasons therefor?

ANSWER

(a)to (e): A statement is laid on the Table of the House. 7th POSITION Statement referred to in reply to Lok Sabha Starred Question No. 227 for 03.01.2018 (a) to (c): Coal India Limited (CIL) has set up 15 (fifteen) coal washeries in coal regions of the country. The details of capacity of the washeries in Mty (million tonne per year) and their location are given in the list below:

MINISTER OF RAILWAYS AND COAL ( SHRI PIYUSH GOYAL)

Sl. no.

Name of coal washery

Type

Subsidiary company

Capacity (Mty)

District, State

Dugda-II

Coking

BCCL

2.00

Bokaro, Jharkhand

Bhojudih

Coking

BCCL

1.70

Purulia, West Bengal

Sudamdih

Coking

BCCL

1.60

Dhanbad, Jharkhand

Moonidih

Coking

BCCL

1.60

Dhanbad, Jharkhand

Mahuda

Coking

BCCL

0.63

Dhanbad, Jharkhand

Madhuband

Coking

BCCL

2.50

Dhanbad, Jharkhand

Kathara

Coking

CCL

3.00

Bokaro, Jharkhand

Kargali

Coking

CCL

2.72

Bokaro, Jharkhand

Swang

Coking

CCL

0.75

Bokaro, Jharkhand

10.

Rajrappa

Coking

CCL

3.00

Ramgarh, Jharkhand

11.

Kedla

Coking

CCL

2.60

Ramgarh, Jharkhand

12.

Nandan

Coking

WCL

1.20

Chhindwara, Madhya Pradesh

13.

Gidi

Non-coking

CCL

2.50

Hazaribagh, Jharkhand

14.

Piparwar

Non-coking

CCL

6.50

Chatra, Jharkhand

15.

Bina

Non-coking

NCL

4.50

Sonbhadra, Uttar Pradesh

Total As mentioned above, CIL has not setup any washery in the state of Maharashtra, Karnataka and Gujarat. However there is one washery in the state of Uttar Pradesh. All the above washeries in coal regions of the country are functional at present. (d) & (e): CIL has planned to set up 27 Coal washeries

36.80 in two phases. 9 coking coal washeries (30.35 Mty total capacity) and 9 non-coking coal washeries (75.5 Mty total capacity) will be set up in the first phase, whereas, 9 additional/ replacement/ renovated coking coal washeries (of total capacity 17.83 Mty) will be set up in Second Phase. The details are given below: CCAI Monthly Newsletter January 2018

| 31

Sl. No.

Washery

Capacity (Mty)

Subsidiary

Location (District, State)

9 Coking Coal Washeries (Phase-1) 1

Madhuband

5.00

BCCL

Dhanbad, Jharkhand

Patherdih-I

5.00

BCCL

Dhanbad, Jharkhand

Dahibari

1.60

BCCL

Dhanbad, Jharkhand

Patherdih-II

2.50

BCCL

Dhanbad, Jharkhand

Bhojudih

2.00

BCCL

Purulia, West Bengal

Dugda (New)

2.50

BCCL

Bokaro, Jharkhand

Moonidih (New)

2.50

BCCL

Dhanbad, Jharkhand

Topa

5.25

CCL

Hazaribagh, Jharkhand

Kargali (New)

4.00

CCL

Bokaro, Jharkhand

Total Sl. No.

30.35 Washery

Capacity (Mty) Subsidiary

Location (District, State)

Ashoka

10.00

CCL

Chatra, Jharkhand

Konar

7.00

CCL

Bokaro, Jharkhand

Karo

3.50

CCL

Bokaro, Jharkhand

Basundhara

10.00

MCL

Sundergarh Odisha

Ib Valley

10.00

MCL

Jharsuguda, Odisha

Hingula

10.00

MCL

Angul, Odisha

Jagannath

10.00

MCL

Angul, Odisha

Kusmunda

10.00

SECL

Korba, Chhattisgarh

Baroud

5.00

SECL

Raigarh, Chhattisgarh

Total

75.50

4.00

CCL

Ramgarh, Jharkhand

9 Non-Coking Coal Washeries (Phase-1)

9 coking coal washeries (Phase-2) 19

3.00

CCL

Bokaro, Jharkhand

Tapin Kathara (Replacement) Kusunda

2.00

BCCL

Dhanbad, Jharkhand

Katras

2.00

BCCL

Dhanbad, Jharkhand

Dugda II

1.00

Madhuband I

2.00

Sudamdih

1.60

BCCL(renovation) Bokaro, Jharkhand BCCL(renovation of Madhuband Dhanbad, Jharkhand washery) BCCL(renovation) Dhanbad, Jharkhand

Mahuda

0.63

BCCL(renovation) Dhanbad, Jharkhand

Moonidih

1.60

BCCL(renovation) Dhanbad, Jharkhand

Total 17.83 Grand Total of Phase 1 & 123.68 2 Washing capacities

32 | CCAI Monthly Newsletter January 2018

Q. No. 239. Coal Royalty 03.01.2018 SHRI PRATAPRAO JADHAV: Will the Minister of COAL be pleased to state:

purpose of examining the issue of revision of present royalty rates on coal and lignite. The Study Group had earlier submitted its recommendation on 27.04.2016, however, pursuant to the change in scenario due to implementation of GST and other factors, the matter was again referred to the Study Group for reconsideration of its recommendation. The final recommenda-

(a) the amount of royalty being received by the Vidarbha region of Maharashtra due to ongoing coal projects in this region;

tion of the Study Group is awaited.

(b) whether the Government proposes to earmark this royalty for cent per cent development of the said region;

Q. No. 2534. Shortage of Coal 03.01.2018

(c) whether the Government proposes to increase the percentage of this royalty; and (d) if so, the details thereof? ANSWER INISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) to (d) A statement is laid on the Table of the House. Statement referred to in reply to Lok Sabha Starred Question no. 239 for 03.01.2018 As informed by the Government of Maharashtra, there are 11 districts in Vidarbha region, out of which only 3 districts have coal bearing areas. Further, during the financial year 2016-17, Rs 770.95 crores of royalty from coal was received by the State Government from the Vidarbha region of Maharashtra. (b) to (d) Rate of royalty on coal is currently @14% ad-valorem, which is collected by the State Government. In addition, 30% of the royalty in respect of mining lease granted before 12th January, 2015 and 10% of the royalty in respect of mining lease granted on or after 12th January, 2015, is being collected by the State Governments as District Mineral Fund (DMF). Royalty funds received by a state can be spent anywhere in the state, whereas DMF money received by a district can be spent only in that district. Till 30.11.2017, an amount of Rs. 318.64 crores was collected by the State Government towards DMF from Vidarbha region , which will be fully utilized for the development of these districts. As regards revision of the rates of royalty on coal , a Study Group was constituted on 21.07.2014 for the

SHRIMATI KOTHAPALLI GEETHA: Will the Minister of COAL be pleased to state: (a) whether the Government of Andhra Pradesh (AP) has requested for provision of four more coal rakes from Mahanadi Coal Fields to meet the shortage of thermal production from Krishnapatnam in Nellore district, if so, the details thereof and action taken thereon; (a) whether some thermal stations in AP are facing lot of difficulties due to lack of coal supply and consequent impact on production and if so, the details thereof; (c) the steps being taken by the Government to tide over the difficulties so far in AP to meet the actual demand of rakes also; (d) the reasons for short supply of coal to Andhra Pradesh power based station; and (e) the other steps being taken by the Government to supply atleast 80,000 tonnes of coal to these stations in future for Andhra Pradesh? ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a): Mahanadi Coalfields Limited (MCL) has not received any request from the Government of Andhra Pradesh for supply of four more rakes to power plant located at Krishnapatnam in Nellore district. However, Andhra Pradesh Power Development Company Limited (APPDCL) vide letter dated 18.12.2017 has requested Chief Freight Traffic Manager, East Coast Railways, Bhubaneswar for allocation of 2.5 rakes per CCAI Monthly Newsletter January 2018

| 33

day to Sri Damodaram Sanjeevaiah Thermal Power Station for evacuation of washed coal from washery receiving coal from MCL. (b): Coal stock at some of the power plants in Andhra Pradesh slipped below seven days for some period Receipt (MT)

due to the fact that some power Gencos had preferred to consume coal from their piled up stock and had regulated their coal intake in 2016-17 and in the initial months of this fiscal. Details of coal receipt, consumption and PLF of these power plants during 2017-18 (April â&#x20AC;&#x201C; November, 2017) are as under:

Domestic

Imported

Total

Consumption (MT)

Dr. N. Tata Rao TPS

5.01

0.00

5.01

5.40

Rayalseema TPS

3.06

0.00

3.06

1.54

0.17

1.71

Plant

Damodaram Sanjeevaiah TPS

(c): Coal supply to power plants is monitored regularly by an Inter-Ministerial Sub-Group comprising representatives of Ministry of Power, Ministry of Coal, Ministry of Railways, Central Electricity Authority and Coal India Limited constituted by the Infrastructure Review Committee of Cabinet Secretariat. The SubGroup in its meeting dated 05.12.2017 has decided to supply additional 1 rake/day to Andhra Pradesh from SCCL. Further, in its meeting held on 12.12.2017, it was decided to supply 5.5 rakes/day (4.0 rakes/day from MCL and 1.5 rakes/day from SCCL) to Dr. N. Tata Rao TPS and 5.5 rakes/day (1.5 rakes/day from MCL and 4.0 rakes/day from SCCL) to Rayalseema TPS. It has been decided to supply coal from MCL

PLF (%)

Stock as on 27.12.2017 (in thousand Tonnes)

In Days

163.35

3.26

46.38

1.79

176.94

to Sri Damodaram Sanjeevaiah TPS as per delivery order. (d): Due to spurt in demand for thermal power arising out of drop in power generation from other sources, like nuclear, hydro and wind energy during the 2nd quarter of 2017- 18, there was consumption by the power plants from their coal stock. Unusual heavy monsoon in mine areas also affected production, loading at mines and transportation of coal. The total coal stock available with the power plants of APGENCO and APPDCL on last day of last three months and as on 27.12.2017 are as under (all figures are in â&#x20AC;&#x2DC;000 tonnes):

Stock as on 30.09.2017

Stock as on 31.10.2017

Stock as on 30.11.2017

Stock as on 27.12.2017

Dr. N. Tata Rao TPS

31.96

38.94

18.14

163.35

Rayalseema TPS

109.83

24.81

28.66

46.38

Damodaram Sanjeevaiah TPS

11.85

63.62

57.17

176.94

Total Stock

153.64

127.37

103.97

386.67

Plant

34 | CCAI Monthly Newsletter January 2018

(e): Standing Linkage Committee (Long Term) [SLC (LT)] recommended for grant of coal linkage from CIL to the following three upcoming TPPs of APGENCO

Sr. No.

Name of the power plant recommended for grant of Coal Linkage as per SLC (LT) dated 21.08.2017

Rayalseema U-6 100 MW

NTTPS St-V (1x800MW)

Damodaram Sanjeevaiah St-II (1x800 MW)

as per the provisions under para 1(B) (i) of SHAKTI Policy, for issuance of LOA:

Name of the Developer

Location of the Plant

Kadapa, Andhra Pradesh APGENCO

Vijayawada, Andhra Pradesh Krishnapatnam, Andhra Pradesh

Supply from MCL to the power houses is based upon Annual Contracted Quantity and the provisions of Fuel Supply Agreements. MCL has taken up with the local Railways i.e. E.Co. Railways & SEC Railways for augmenting rake supply for raw coal as well as washed coal.

GOVERNMENT OF INDIA MINISTRY OF COAL RAJYA SABHA Q. No. 45. Fall in coal imports due to surge in domestic production 15.12.2017 SHRI T.RATHINAVEL Will the Minister of Coal be pleased to state : (a) whether coal imports into the country are unlikely to rise because of surge in domestic coal production; (b) whether demand for coal from new thermal power plants is likely to taper off after five years and leave some coal mine assets stranded; (c) whether India the dynamic coal teryears; and

is no longer import market of yes-

(d) whether, while the domestic production would continue to expand, Indiaâ&#x20AC;&#x2122;s energy trajectory is becoming less coal based raising a real risk for stranded assets, if so, the details thereof?

ANSWER MINISTER FOR COAL AND RAILWAYS (SHRI PIYUSH GOYAL) (a) & (c): 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. 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. During April-Sept. 2017-18, 97.66Mte. (Provisional) of coal was imported as compared to 101.35Mte. in the corresponding period of 2016-17 showing a decline of 3.6%. The fall in imports is largely on account of enhanced production by CIL, due to which the country has moved from a regime of coal scarcity to a coal surplus situation. The vendible stock of CIL has increased form 53.62 Mt. as on 01.04.2015 to 61.92 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 CCAI Monthly Newsletter January 2018

| 35

2016-17. 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.

(a) to (c): The methodology for auction of coal mines / blocks for sale of coal under the provisions of the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957 is under consideration of the Government.

(b ) & (d): The total consumption in the coal based power plant has been increasing commensurate with increase in demand of coal based generation. The total coal consumption (domestic and imported) during 2015-16(by power plants)was 545.9 MT which has increased to 574.9 MT in 2016-17. To meet the projected energy requirement by the year 2021-22, as per the 19th Electric Power Survey of Central Electricity Authority (CEA), along with the targeted installed capacity of 175 GW of Renewable energy Sources by 2021- 22, it is estimated that the domestic coal requirement for power plants is likely to be 691 MT. Hence, even with a rise in the installed capacity of renewable energy sources, there is no likelihood of coal

(d) & (e): CIL has envisaged and action has been initiated for closing 37 unsafe underground mines in 2017-18. Risk assessment is a continuous process. As soon as a mine is declared unsafe and it is apprehended that its geomining condition is such that it is not in a position to be run safely, then the mine

assets being stranded in the near future.

Q. No. 47. Allowing private players in commercial mining space 15.12.2017 SHRI K.R. ARJUNAN: Will the Minister of COAL be pleased to state: (a) whether private players will be able to bid for mines with about 100 million tonnes of coal reserves in the initial phase of auctions for commercial mining rights; (b) whether the Coal India Limited (CIL) is gearing upto compete with private companies for the first time since 1973; (c) whether allowing competition in the commercial mining space will create a positive disruption in the market;

closure decision is taken.

Q. No. 50. Business roadmap plan by CIL 15.12.2017 SHRIMATI VIJILA SATHYANANTH: Will the Minister of COAL be pleased to state: (a) whether Coal India Limited (CIL) has approached a multinational consultant for a business roadmap plan-Vision 2030, if so, the details thereof; (b) whether CIL considers all options open at a time when coal demand is subdued and uncertainty looms over it in the long run; and (c) whether the said multinational consultant has submitted any proposal or report in this regard, if so, the details thereof? ANSWER MINISTER FOR COAL AND RAILWAYS (SHRI PIYUSH GOYAL) (a): Yes sir, CIL has engaged M/s KPMG through open tender for formulating the Document, Draft ‘Vision 2030’.

ANSWER

(b): As per projection of demand for coal in 2017-18, the same has been pegged at 908.40 Mt. CIL has set Annual Plan target of 600 Mt coal production and an equal amount of coal offtake during 2017-18. For meeting future demand of coal, CIL has prepared a roadmap for achieving a coal production level of 1 Billion Tonnes by the year 2019-20. CIL has indentified mines with a production capacity of 908 MT so far.

MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL)

(c): Draft ‘Vision 2030’ document has been submitted by the consultant.

(d) whether CIL is closing 37 unviable mines this year; and (e) whether CIL will close several more mines in the next two years?

36 | CCAI Monthly Newsletter January 2018

Q. No. 858. Safety measures at coal mines 22.12.2017 SHRI MAHESH PODDAR Will the Minister of COAL be pleased to state: (a) the safety measures implemented by the coal companies during the last five years; (b) whether Government is aware of illegal and risky mining happening in these mines; and (c) if so, the details of safety measures adopted and steps taken to stop illegal mining? ANSWER MINISTER OF COAL AND RAILWAYS (SHRI PIYUSH GOYAL) (a): Apart from the provisions as mandated by The Mines Act, Regulations and Rules thereunder, the following safety measures have been implemented by Coal India Limited (CIL) and its subsidiaries in last five years. 1. Safety Audit of all operating mines of Coal India Ltd. (CIL) through multi-disciplinary Inter-Company Safety Audit teams in 2017.

8. Assessment of stability of OB Dumps and Benches conducted thoroughly by using expertise of CMPDIL and multi-disciplinary ISO teams in most of the opencast mines. 9. Introduction of Gas Chromatograph for better accuracy in mine air sampling and Man-Riding system in UG mines having arduous travel. 10. Introduction of simulators based training to Dumper Operators, high mast towers for increasing level of illumination, deployment of Surface Miners for blast free mining, proximity warning devices, rear view camera, automatic fire detection in dumpers etc. (b)to(c): As informed by CIL, illegal and risky coal mining is not done by CIL and its subsidiaries. All the coal mining operations are being done scientifically and systematically by adopting the appropriate technology and mining methods after obtaining mandatory permissions for extraction of coal from the Directorate General of Mine safety (DGMS).

Q. No. 860. Increase in dispatch of coal by CIL 22.12.2017 SHRI N. GOKULAKRISHNAN: SHRI R. VAITHILINGAM: Will the Minister of COAL be pleased to state:

2. Online Centralized Safety Monitoring System â&#x20AC;&#x153;CIL Safety Information System (CSIS)â&#x20AC;? developed and uploaded in CIL website.

(a) whether the dispatch of coal by Coal India Limited (CIL) to its consumers in various sectors, including power, through road in April-October went up by 12 million tonnes;

3. Imparting Specialized Training by SIMTARS, Australia on Risk Assessment to prepare Risk assessment based Safety Management Plans (SMPs), Principal Hazards Management Plans (PHMPs) and Standard Operating Procedures (SOPs).

(b) whether it is a fact that CIL had offered to supply the fuel to plants located at shorter distance by road from the available pit head stock; and

4. Establishment of Geo-Technical Cell in all subsidiaries

(c) whether it is also a fact that Government had launched Grahak Sadak Koyla Vitaran App in a bid to benefit customers of CIL lifting coal through road, if so, the details thereof ?

5. Site-specific risk assessment based SMPs prepared for each mine of CIL. All SMPs are being monitored through ISO of each subsidiary.

ANSWER

6. Principal Hazards Management Plans (PHMP) formulated as a part of SMP.

MINISTER OF COAL IN THE MINISTRY OF COAL AND RAILWAYS ( Shri Piyush Goyal )

7. Site-specific, Risk Assessment based Standard Operating Procedures (SOPs) for all Mining and Allied operations framed and implemented.

(a) & (b) : Yes, Sir. The quantity of coal which Coal India Limited (CIL) dispatched through road mode till October 2017 to its various consumers went up by

CCAI Monthly Newsletter January 2018

| 37

more than 12 MT compared to the quantity supplied in the same period last fiscal. (c) : Coal India Limited has launched the ‘Grahak Sadak Koyla Vitaran App’ on 01.11.2017 aimed at benefiting customers of the Company that are being supplied coal by road. Some of the benefits of the ‘App’ are:(i) helps achieve transparency in dispatch operations, as a tool to monitor, whether the dispatches are made on the fair principle of ‘First in First Out’ and keeps track of all the activities from issuance of Sale Order to physical delivery of coal by road. (ii) easy accessibility of the information at the click of the button, apart from transparency in the system of loading programme and dispatch. (iii) helps in logistics planning for lifting of coal in tune with the loading programmes. (iv) helps in improved planning of procurement, production and stock management by the customers. (v) provides date-wise, truck-wise quantity of coal delivered against the Sale Orders and information related to Scheme-wise, Colliery-wise, Grade-wise, customer-wise details of Sale Orders issued during a period.

Q. No. 1331. Decontrol of coal prices 29.12.2017 SHRI DHARMAPURI SRINIVAS: Will the Minister of COAL be pleased to state: (a) whether it is a fact that Government is contemplating on decontrol of its authority on coal prices and giving free hand to the coal companies to fix the coal prices; and (b) if so, the details thereof and the reasons therefor? ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) & (b) Fixing the price of coal is not in the domain of the Government. Pricing is an operational decision of Coal India Limited (CIL) and Government does not

38 | CCAI Monthly Newsletter January 2018

play any role in it. After complete decontrol of coal prices w.e.f. 01.01.2000, CIL fixes the basic prices of coal produced by CIL and its subsidiary companies. The coal companies fix the coal price based on input costs, inflation index, market trends, etc.

Q. No. 1333. Shortage of coal for power pl ants 29.12.2017 SHRI K. R. ARJUNAN: (a) Will the Minister of COAL be pleased to state: whether it is a fact that there is no shortage of coal and that the power plants should adhere to the guidelines for stocking of the dry fuel; (b) whether it is also a fact that pit head stock of Coal India Ltd. was at 30.3 million tonnes; and (c) whether it is also a fact that many State Governments have brought to the notice of Central Government about the shortage of coal at power plants, if so, the details thereof ? ANSWER MINISTER OF RAILWAYS AND COAL (SHRI PIYUSH GOYAL) (a) : As per guidelines prescribed by Central Electricity Authority (CEA), the thermal power stations are required to keep average coal stock for 21 days consumption for smooth operations. The norms for number of days of coal stock to be kept in the power plant depends on the distance of the power plant from the mine-head are as per details given below: Number of Distance of Power Plant

Days of Coal Stock

Pit-head Station

Upto 500 kms away from Coal Mine

Upto 1,000 kms away from Coal Mine

Beyond 1,000 kms away from Coal Mine

Some power stations of the country opted to restrict the coal supplies from the Coal Companies during

major part of the last year and in the initial months of this fiscal and preferred to consume coal from their stock when demand for power was subdued. Total coal stock at the power stations which was 38.87 Million Tonne (MT) in the beginning of 2016-17 had reduced to about 27.74 MT by the end of 2016-17, while stock with CIL increased from 57.64 MT to 68.42 MT during the same period. Hence, there had been no shortage of coal in the beginning of the current fiscal i.e. 201718 at CIL end, but coal stock at Power House end reduced as Power Houses preferred to consume coal from their own stock during 2016-17. Name of Power Genco

(b) : The pit head coal stock of CIL as on 01.04.2017 and 01.12.2017 was 68.42 MT and 29.987 MT (unaudited) respectively. (c): Though many State Governments have informed about the shortage of coal, it is also a fact that number of Power Gencos had regulated their coal supply in 2016- 17 and in the initial months of this fiscal when demand for power was subdued while preferring to consume from their stocks owing to their comfortable stock position. The details of some of such State Government Power Gencos are as under:

% Materialization against FSA during 2016-17

% Materialization against FSA during 2017-18 (1st Qtr)

RRVUNL (Rajasthan)

53%

23%

PSPCL (Punjab)

64%

66%

MPPGCL (Madhya Pradesh)

46%

51%

HPGCL (Haryana)

54%

24%

GSECL (Gujarat)

51%

68%

Mahagenco (Maharashtra)

62%

77%

The coordinated efforts of Ministry of Coal, Coal India Limited and Railways have ensured stepping up coal supplies to Power Sector including State Gencos. In fact, coal supplies to Power Sector from CIL grew by 20%, 19%, 17% and 9% during the months of August-2017, September-2017, October-2017 and November-2017 respectively over the corresponding months of the last year.

CCAI Monthly Newsletter January 2018

| 39

OVERALL DOMESTIC COAL SCENARIO Coal Production (in MT) Company

January, 2018

% Achievement

Target

Actual

CIL

63.3

56.7

SCCL

5.5

6.4

April- January, 2018

% Achievement

Target

Actual

89.5%

469.9

440.6

93.8%

115.8%

57.0

48.4

84.9%

Overall Offtake (in MT) Company

January, 2018

January, 2017

% Growth

April – January, 2018

April – January, 2017

% Growth

CIL

53.7

51.4

4.6%

475.1

443.1

7.2%

SCCL

6.2

6.0

3.3%

52.8

48.6

8.7%

April – January, 2018

April – January, 2017

% Growth

Coal Despatch to Power (Coal and Coal Products) (in MT) Company

January, 2018

January, 2017

% Growth

CIL

40.6

39.6

2.6%

372.6

347.5

7.2%

SCCL

4.99

4.98

0.3%

43.74

41.43

5.6%

Spot E-auction of Coal (in MT) Company

Coal Qty. Allocated January, 2018

Coal Qty. Allocated January, 2017

Increase over notified price

Coal Qty. Allocated April - January, 2018

Coal Qty. Allocated January, 2017

Increase over notified price

CIL

4.59

4.93

58%

45.42

42.98

65%

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

Coal Qty. Allocated January, 2018

Coal Qty. Allocated January, 2017

Increase over notified price

Coal Qty. Allocated April -January, 2018

Coal Qty. Allocated April -January, 2017

Increase over notified price

0.81

2.17

11%

28.24

40.49

25%

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

Coal Qty. Allocated January, 2018

Coal Qty. Allocated January, 2017

Increase over notified price

Coal Qty. Allocated April -January, 2018

Coal Qty. Allocated April -January, 2017

Increase over notified price

CIL

0.25

10.78

4.60

28%

Company

Coal Qty. Allocated January, 2018

Coal Qty. Allocated January, 2017

Increase over notified price

Coal Qty. Allocated April -January, 2018

Coal Qty. Allocated April -January, 2017

Increase over notified price

CIL

0.35

52%

0.70

6.26

39%

Special Spot E-auction (in MT)

40 | CCAI Monthly Newsletter January 2018

CCAI Monthly Newsletter January 2018

| 41

271498.43

TOTAL

Source CEA

TOTAL

BHUTAN IMP

HYDRO

62.94

NUCLEAR

77.72

62.47

59.3

ACTUAL*

JAN-2018

1229400

PROGRAM

THERMAL