COAL POLICY IN INDIAPrakash SinghM.Phil 2015-16

IIFM, Bhopal(M.P.)

INTRODUCTIONThe Ministry of Coal determines the policies and strategies related to :- Exploration and development of coal and

lignite reserves. Sanctioning of important projects of high value Deciding all related issues.

These functions are exercised through :- Coal India Ltd Neyveli Lignite Corporation Ltd. A joint venture with Govt. of AP called Singareni

Collieries Company Limited.

QUALITY POLICY Develop an eco-friendly, environmentally

sustainable and cost effective coal industry to provide safety and support to various industry-sectors of the country.

Facilitate state-of-art technology and resource optimization in Indian coal sector inclusive economic growth of the country.

Comply with all the requirements of quality management system.

Constant improvement in its effectiveness. Promotion of socially responsible and transparent

governance system.

COAL DISTRIBUTION POLICY

Applicant consumer is required to achieve the milestones related to the project given in the letter of assurance which will be valid till 12 to 24 months as applicable. Failing this, LoA will be liable to be terminated and commitment guarantee forfeited.

However, the validity period of LOA can be extended by the competent authority on the recommendation of Standing Linkage Committee (LT)

Fuel supply agreements (FSAs) will be signed for the domestic coal quantity of 65%, 67% and 75% of annual contracted quantity (ACQ) for the remaining four years of the 12th five year plan for the power plant having normal power linkages to meet the power supply of thermal power plants (TPP) of 78000 MW capacity.

Tapering linkage would get supply according to the tapering linkage policy

To meet the balance FSA obligations of the requirement of 78000 MW TPPs, CIL may import coal and supply the same to the willing power plants on cost plus basis.

Power plants may also import coal themselves, if they opt so.

MINE CLOSURE PLAN All coal mine owners shall adopt a Mine Closure Plan

for each of their mines comprising progressive closure plan and final closure plan duly approved by the competent authority

The competent authority for approval of the Mine Closure Plan shall be the Standing Committee constituted by the Ministry of Coal for the purpose of approval of Mining Plans. In case of projects/mines of Government Companies, the competent authority to approve the MCP will be the concerned Board of the Company wherever the power is so delegated for approval of the Mining Plan.

Four copies of MCPs of all mines shall be submitted to Ministry of Coal within one month of the approval within the timeframe indicated.

The Companies shall carry out all changes in the Closure Plan including the amount of money to be deposited for the proposed Escrow Account as directed by Ministry of Coal.

The Mine Closure Plans will have two components viz. i) Progressive or Concurrent Mine Closure Plan and ii) Final Mine Closure Plan.

The money to be provided per hectare of total Project Area for the purpose is to be deposited every year after commencement of any activity on the land for the mine after opening a Fixed Deposit Escrow Account prior to obtaining mine opening permission from Coal Controller.

If the Mine owners fail to deposit the annual amount required to be deposited, the Government can withdraw the mining permission.

The details of the final Mine Closure Plan along with the details of the updated cost estimates for various mine closure activities and the Escrow Account already set up shall be submitted to the Ministry of Coal for approval at least five years before the intended final closure of the mine.

Mining is to be carried out in a phased manner initiating afforestation/reclamation work in the mined out area of the first phase while commencing the mining in the second phase.

The Government may at any time before the closure of mine require certain activities to be included in the mine closure plans, which it may consider necessary for the safety and conservation of environment or in compliance with any modification/ amendment in the relevant legislation.

The mine owner shall undertake to provide the additional fund equivalent to the gap in funding before five years of Mine Closure failing which it may be recovered by such other methods as the competent authority may deem fit in this regard.

After the closure of the mine, the reclaimed leasehold area and any structure thereon, which is not to be utilized by the mine owner, shall be surrendered to the State Govt. concerned following a laid down procedure.

GUIDELINES FOR SETTING UP COAL WASHERIES

Any consumer with a FSA may set up a washery for his own consumption of washed coal or any private or public sector enterprise may set up and operate washery on behalf of such consumer on the land subject to certain conditions.

Washery operator shall have MoU with the consumer or group of consumers, who has an FSA or long term coal linkage with a coal company, for production of predetermined quantity of washed coal, middling if any and rejects.

While selecting technology for the washery, due consideration shall be given to the coal conservation.

Normally, the life of the washery shall not be less than 20 years.

The minimum throughput capacity of a washery should be 2.0 Mt

Water and electricity during construction period shall be provided by respective coal companies at one point on chargeable basis, if available.

Water for operation of the washery shall, in general, be arranged by the washery operators.

The washery operator shall arrange electricity for operation of the washery on his own.

In case of the washeries of the consumers the coal company will supply agreed quality and quantity of raw coal in terms of its long term fuel supply agreement.

Railway siding facilities will be provided by the coal companies to the washeries of the consumers or their washery operators on chargeable basis.

The prospective Washery operator shall provide basic technological features of the washery to coal companies prior to set up.

Monthly returns shall have to be submitted by the washery operator to the coal companies concerned to avoid any chance of malpractice

PRICING POLICY OF COAL The Government decided to de-regulate

the prices of soft coke, hard coke and D grade of non-coking coal.

The Government also decided to allow CIL and SCCL to fix prices of E, F and G grades of non-coking coal once in every six months by updating the cost indices as per the escalation formula .

Under the Colliery Control Order, 2000, the Central Government has no power to fix the prices of coal.

The Tariff Commission is being involved in pricing of coal for the Power Sector and to suggest modalities for pricing of coal for other sectors to control the monopoly situation in the coal market .

POLICY REGARDING COAL LINKAGES

The consumers desiring linkage for supply of coal should apply for linkage to the SLC (long Term). The consumers should route the application through the concerned Ministry to the Chairman, SLC (LT).

The Additional Secretary in the Ministry of Coal, Govt. of India is the Chairman of the Standing Linkage Committee for power and cement sectors

The Government had exempted the prices and distribution of coking coal from the provisions of Colliery Control Order.

Consumers having a projected requirement upto 5000 MT of coal per month and desiring drawal of coal from CIL are required to submit linkage application, in the prescribed proforma.

In case any consumer does not draw supplies continuously for 24 consecutive months, the linkage is treated as `snapped‘.

Linkages are not granted to the seasonal industries like manual brick manufacturing units.

Consumer requiring coal, more than 5000 tonnes per month are required to obtain a clearance from the ministry of coal before obtaining formal linkage by CIL .

EXPORT IMPORT POLICY Coal is under Open General Licence (OGL) list. Export to Nepal and Bhutan is done in rupee

exchange as per the protocol between the two countries and with Bangladesh it is done in US Dollar.

Export of coal by CIL is made through tender route .

Coking coal is being imported by Steel Authority of India Limited (SAIL) and other Steel sector manufacturing.

Non-coking coal on consideration of transport logistic and commercial prudence as well as export entitlements.

LEGISLATION Coal India (regulation of transfers and

validation) Act, 2000 Amendment to the Coal Mines

(Nationalization ) Act, 1973 to promote non-captive mining of coal

EXPLORATION OF COALCarried out in two stages:- In the first stage, Geological Survey of

India(GSI) undertakes Regional Exploration for locating potential coal bearing areas on a continuous basis.

In the second stage, Detailed Exploration is carried out by CMPDI directly as well as through Mineral Exploration Corporation , State Govts. and private agencies.

COLLIERY CONTROL ORDERColliery control order 2000 order talks about :- Definitions of ‘coal’, ‘coal controller’,

‘colliery’, ‘disposal’, ‘agent’, and ‘size’. Categorisation of coal. Procedure for categorisation of coal. Submission of returns and information to

Coal Controller. Directions to regulate the disposal of

coal stocks

Power of the Coal Controller for quality surveillance.

Power to prohibit or limit the mining or production of coal.

Requirement of prior permission to open a coal mine, seam or section of a seam.

Notice of suspension or closure.

Power to restrict sub-division of a coal mine.

Power to inspect collieries. Delegation of powers to Coal Controller. Power to exempt.

COAL DISTRIBUTION Price and distribution of all grades of coal

have been deregulated. Coal Companies are allocating coking coal to

steel plants for their requirements. For core sector, sale of coal is guided by

linkages and allocations by the competent authorities.

For non-core Sector consumers CIL has decided to authorize its subsidiary companies to formulate their own system and procedure for sale of coal to this sector.

COAL MINING BY STATE The State Government company is authorised

to do coal or lignite mining by its Memorandum and Articles of Association.

The company will do coal or lignite mining in accordance with the provisions of the Coal Mines (Nationalisation) Act, 1973, the Mines & Minerals (Development &. Regulation) Act, 1957, the Contract Labour (Regulation & Abolition) Act, 1970, and all other mineral, environmental and labour laws and other regulations governing the Indian coal industry.

For coal the company shall obtain a certificate from CIL. For lignite, Neyveli Lignite Corporation.

The proposed mining area has not been allotted to a captive mining company.

No financial assistance from the Central Government or CIL or Neyveli Lignite Corporation shall be provided.

None of the coal or lignite mines operated by the company will be taken over by the Central Government or Coal India Limited or Neyveli Lignite Corporation in the event of closure of such a mine.

No employee of the company, engaged in a coal or lignite mine operated by it, will be absorbed in CIL or Neyveli Lignite Corporation.

TRIAL E-MARKETING BY COAL COMPANIES

The Govt. had approved the sale of coal to non-core sector through electronic marketing on Internet on trial basis in BCCL.

The Govt. decided to sell 20 million tonnes of coal by CIL subsidiaries through e-marketing for the year 2005-06 on trial basis.

The scheme is open to consumers and traders who can participate and bid for the quantity as per their requirement from their preferred sources.

The floor price of coal would be limited to 20% above the notified price of coal.

FDI IN COAL100% foreign investment in the equity of an Indian subsidiary of a foreign company may be allowed subject to the conditions that such an Indian subsidiary:- Shall not do coal mining and Shall not sell the washed coal or sized

coal from their Coal Processing Plants in the open market and shall supply the washed coal from their Coal Processing Plants

The other private Indian companies engaged in exploration or mining of coal and lignite for captive consumption for production of iron and steel and production of cement may be allowed foreign equity upto 100%.

ELIGIBILITY TO COAL MINING

The parties eligible to do coal mining in India without the restriction of captive consumption are:- The Central Govt., a Govt. company (including a

State Govt. company), a Corp.owned, managed and controlled by the Central Govt.

A person to whom a sub-lease has been granted by the above mentioned Govt. company or corp. having a coal mining lease, subject to the conditions that the coal reserves covered by the sub-lease are in isolated small pockets.

A company engaged in the following activities can do coal mining in India only for captive consumption:- production of iron and steel generation of power washing of coal obtained from a mine, or such other end use as the Central

Government may, by notification, specifySpecial dispensations provided for setting up of associated coal companies by the end -user parties offered captive coal blocks

Guidelines for preparation of Mining Plans for Coal/Lignite Blocks

The plan document should contain:- Cover Page Documents to be enclosed Summarised Data Information regarding earlier approved Mining Plans, if

any. Location Geology and exploration details Mining details End use of coal/ lignite Environmental management Progressive and final mine closure plan Other

The chapter should contain:- Introduction Details of Earlier Approval of Mining Plan Location, topography & Communication Exploration, Geology, Seam sequence, Coal Quality

and Reserves Mining details Manpower, Safety and Supervision Coal Handling, Washing & Mode of Dispatch Infrastructure Facilities proposed and their location. Land Requirement Environment management Progressive and Final Mine Closure Plan

Annexures as required.