Failures are the pillars of success, we were taught in school. However, one doubts whether the Narendra Modi government has taken any lessons from the failures of the former UPA government with regard to pushing up the country’s coal production.
Last month, coal and power minister Piyush Goyal unveiled a grand plan to mitigate India’s fuel crisis, a legacy of the Manmohan Singh government.
Goyal wants the national miner, Coal India Ltd (CIL), to add 500 million tonnes capacity in the next four years so as to ensure round-the-clock electricity supply for all.
Arguably, the target set by the minister is stiffer than the Prime Minister’s expectation of a 10 per cent compounded annual growth rate (CAGR) in coal production during the period.
Goyal is not the first one to have held out such tall hopes.
Hyping up output The UPA predicted 9 per cent CAGR in fuel production during the Eleventh Plan (2007-12) to ensure “power for all”.
Coal India was mandated to produce 520 million tonnes of fuel in 2012. Captive production was expected to reach 111 million tonnes. What actually happened is history.
CIL’s output is expected touch 500 million tonnes this year. Captive miners (almost all of whom were de-allocated by the Supreme Court in September) are barely producing 40 million tonnes of coal — 64 per cent short of the 2012 target.
Industry has blamed regulatory and administrative hurdles for the wide gap between targeted and actual output.
The UPA blamed the inefficiencies of CIL as the prime reason for the fuel crisis.
Goyal is sticking to this line. An efficient CIL — he regrets — can add 100 million tonnes of production a year.
Goyal is not entirely wrong.
The utilisation ratio of dumpers and shovels used in CIL opencast mines, the mainstay of coal production in India, is around half the optimal levels — a clear reminder that the miner is not producing to its potential.
CIL’s unionised labour force, earning between ₹25,000 to ₹65,000 a month, is not as productive as it should be.
Its managers are expected to follow elaborate procedures, causing delays in decision making.
Last but not the least, all-pervasive corruption, driven by insatiable demand for ‘favours’ from politicians, is taking a toll on performance.
Ideally, private miners could tackle this part better.
But they too failed to leave a mark. Captive production grew by merely 5 million tonnes in the last four years, implying there are other reasons behind the fuel crisis.
Land factor The discussion on structural reasons that have affected public and private sector miners in equal measure, usually veers towards regulatory issues, especially ‘green hurdles’.
The fact is that green norms has been rightly tightened in the last decade (and should be tightened further). But the inordinate delay in green clearances needs to be reduced.
Increasing use of digital technology will reduce the scope of some corrupt forest officials to take subjective decisions.
But that does not mean one can develop mines as quickly as in Australia or Africa.
Because, India is populous. And, the conciliatory framework (as in Forest Rights Act) is now stronger than ever.
Unfortunately, there is no solution in sight in addressing the crucial issue of land availability. Unlike other industries where land requirement is fixed; a miner needs expansion almost on a daily basis, to maintain production.
A small 4 million tonnes per annum (mtpa) open-cast mine, with a mine-face (width) of one km, moves ahead by 50 metres a year, in Odisha.
The land requirement may be three to six times more in Madhya Pradesh and Maharashtra, respectively, for producing the same amount of fuel, due to the lower thickness of coal seam and a lopsided stripping ratio (ratio of overburden to coal).
Assuming a hypothetical 1:2 stripping ratio, a back-of-the-envelope calculation suggests CIL needs 2,200 hectares of land (five times the size of the relocated Singur Nano facility) every year, to maintain the current opencast production of 426 million tonnes.
Add to this, the incremental land requirement due to projected growth in production and the public policies towards towards land acquisition and displacement since the middle of the last decade, and the task becomes uphill to say the least.
Even the laws don’t help. The series of angry protests between 2005 and 2008 has converted acquisition laws into mere pieces of paper.
No State government today will dare use force on the unwilling.
People-friendly approach CIL could scrape through so far, because it adopted a people-friendly, jobs-for-land policy. Private miners didn’t offer jobs. They didn’t get the land either.
Only one (Tatabira-1 of Hindalco awarded in 1994) out of three dozen captive blocks awarded in Odisha, could be developed. In Jharkhand, that has the one of the largest share of blocks, only around five mines are operating.
The issue is not merely about getting land. It’s about getting contiguous land along the strike zone and in time — so that machines can operate to full potential. And, that’s a daydream in India.
CIL may be getting land. But they get it in patches and with four to eight years’ delay. The result: the mines cannot grow as per plan.
The bottomline is: Learn from the failures of Reliance (Raigad SEZ) or Tatas (Singur), and, create the right framework to take people on board.
Till then, don’t expect coal production to grow at 10 per cent CAGR.