Coal India set difficult production target, again

Pratim Ranjan Bose Kolkata | Updated on April 29, 2014 Published on April 29, 2014

Environment authorities are holding back essential mining clearances

The ruling UPA Government has a trademark style of dealing with coal production: set a monumental target for the national miner Coal India Ltd (CIL) without clearing any of the hurdles that its key mining projects face.

According to sources, the miner has been asked to enhance coal production by nearly 10 per cent, from 463 million tonnes (mt) in 2013-14 to 507 mt, this fiscal.

To achieve this target, CIL has to step up output by 45 mt — approximately two-thirds of the capacity added through the last Plan period (2007-12) and about 50 per cent more than the total captive production of 2013-14.

Sources say that given the current state of affairs with regard to land acquisition and regulatory red tape, the target is impractical.

Projects hanging fire

To come anywhere close to 500-mt target, CIL needs clearances for at least two major expansion projects at Kushmunda (Korba) in Chhatisgarh and Ananta (Talcher) in Odisha.

The giant opencast mines are currently producing a total of 30 mt of coal annually. CIL wants this to be stepped up to 45 mt. But both the projects have been hanging fire for ages.

A proposal to expand Kushmunda from 18 mt to 25 mt has been pending with forest authorities while the environment ministry is still undecided about the expansion plans for Ananta from 12 mt to 20 mt because CIL had lifted 2 lakh tonne more coal (1.6 per cent of annual production) than the permissible level in 2012.

“The issue is not about regulation but of taking decisions within a reasonable timeframe. If there is a violation, let it be corrected. Why do they keep sitting on it,” said a source.

“If the proposals are not cleared soon, CIL will miss the target by a few miles,” he added.

Missing buyers

But even if so much coal is produced, will there be buyers?

Last year, the miner’s plan to step up supplies by liquidating pit-head stock was hampered by lukewarm demand.

Low demand for electricity forced a number of State utilities to stop picking up their fuel allotments.

The issue didn’t find much cognisance in this annual exercise either. CIL has been asked to step up off-take by 48 mt, to 520 mt.

Impact on pay packets

The unreasonably high target may have a side-effect on coal officers’ pay packets. Following a 2007 wage pact, a part of worker pay is linked to production performance.

Naturally, missing the target would have a negative impact on worker compensation.

Of course, it would bring some savings to CIL. But that really isn’t a priority to the cash-rich miner.

Published on April 29, 2014
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