India’s coal reserve is huge and the state-owned Coal India Ltd (CIL) is the world’s largest coal producer. Yet, availability of coal has been a matter of concern these days. More than production it is the transportation and distribution of coal which is critical for the economy, says S. Narsing Rao, Chairman and Managing Director (CMD) of CIL, in an interview to the Business Line .
Rao, an officer of the Indian Administrative Service (1986 batch, Andhra Pradesh cadre) has been tormented by two issues ever since he took over as the CMD CIL in April this year — how to boost CIL’s production and , perhaps more important, how to step up despatches of the coal produced.
“There is no point going on producing unless we can ensure timely delivery of what we produce at the doorsteps of our customers”, Rao observes. “Holding huge pithead stocks is no fun”.
Railway despatches
CIL was holding pithead stocks of 71 million tonnes (mt) when he took over. “Since April, we liquidated the stocks by 29 mt to 42 mt thanks to improved railway loading”. In past eight months, as he points out, railway despatches improved by 11.5 per cent to 145 mt as compared to 130 mt in the same period of the previous year. Last year, the railway despatches were up by a meagre three per cent or so.
“I’m in touch with the top brass of the Railway Board almost on a daily basis and the Prime Minister’s Office has constituted a high-power committee headed by the Railway Board Chairman to expedite coal movement,” he says.
But then he also concedes there are problems facing the Railways. In first two weeks of December, CIL’s pithead stocks increased by 1.5 mt to 43.5 mt. The railway despatches in first half of this fiscal were good, but not so any more. The average rake availability so far has been 176 per day, which, it is felt, should be at least 200 per day.
This being the busy season, the demands for rakes from various sectors virtually skyrocket. “Coal being the single-largest item of traffic of the Railways we can genuinely claim special favour, which is never granted”, he remarks. “No rail freight concession for transportation of coal.”
Demand mismatch
There is a mismatch in CIL’s rake demand in the first half and second half of every fiscal with demand dipping in the first and jumping in the second.
The coal production and, with it, the despatches suffer during the monsoon months. The mines would get flooded and there would be safety concerns. The coal rakes idle. “Let the Railways come out with a proper business model after calculating the optimum return on investment spread over the whole year and Coal India is prepared to pay for the idle rakes,” he makes it clear. “The Railways is a monopoly, so are we; where can we go unless we look after each other.”
Poor execution
Rao, however, is unsparing in his criticism of the Railways when it comes to implementation of three projects designed to facilitate coal transportation.
The projects are Tori-Shibpuri (93 km) under East Central Railway, Raigad-Mand (300 km) under South East Central Railway and Vasundhara mines-Jharsuguda (55 km) under South Eastern Railway.
“These three projects, each capable of handling 100 mt annually, if implemented, will not only benefit CIL, but will also boost the Railways’ earning substantially, by an estimated Rs 9000 to Rs 10,000 core annually,” he says, adding, “I use every possible forum to highlight the criticality of early implementation of these projects.”
Tori-Sibpuri project was conceptualised in 1999 with an estimated cost of less than Rs 400 crore, which has since shot up to an estimated Rs 2,000 crore.
The Raigad-Mand project will cost Rs 4,000 crore and the Vasundhara-Jharsuguda project another Rs 600-700 crore. “Except the Raigad-Mand project, which is being implemented by a JV between IRCON, South Central Coalfields Ltd and Chhattisgarh Government, the two other projects will be funded entirely by Coal India and in fact we’ve already provided Rs 150 crore each for the first and third projects but the pace of work leaves much to be desired.”
Even right now, as it is pointed out, an estimated 100 mt of production is locked up due to non-availability of railway connections — 40 mt under Mahanadi Coalfields Limited, another 40 mt in North Karanpura and 20 mt in Korba areas. “All the clearances are available for starting work in these places but we cannot as there are no rail links,” he says. “There have to be two kinds of links, one is arterial link with trunk routes and the other is siding and we pay for everything.”
Right choice
At present, the Railways accounts for the transportation of the bulk of CIL’s production, more than 50 per cent, followed by road, around 26-27 per cent, and MGR (Merry Go Round) accounts for the balance 20 per cent or so. The road movement is mainly for road bridging, that is, for carrying coal from pitheads to nearest railheads.
“Frankly, I want the road sector share to drop substantially due to various reasons such as environmental issue, safety concerns, pilferage and muscle flexing of the road lobby with the back up support of politicians and others,” he observes.
“Besides, it is a colossal national loss to burn a costlier fuel to carry a cheaper mineral but I’m helpless and I sincerely want the railway projects to come up fast.”
Rao does not think IWT (inland water transportation) mode could provide any worthwhile solution to burgeoning demand for coal transportation.
“IWT might be okay for handling a few million tonnes of imported coal but we’re talking about millions and millions of tonnes,” he observes. “The prospects of IWT mode for domestic coal movement do not appear too promising for another reason — none of our collieries is located close to any river system.”