No-go ghost still haunts Coal India

More than eight months after the government scrapped the controversial ‘no-go’ policy, which had banned mining in some areas, state-owned Coal India Ltd (CIL) is still struggling to operate its new projects located in the so-called no-go areas in the absence of a formal go-ahead from the environment ministry.

The delay is set to stem the miner’s efforts to meet new supply obligations, further aggravating the ongoing coal crisis in the country.

“Since September last year, only two of our new mining projects have received clearance and, that too, outside of the no-go list. Overall, 179 proposals are still awaiting green clearances,” CIL Chairman S Narsing Rao told Business Standard. This includes 132 proposals awaiting the first stage clearance and 47 waiting for the second stage nod from the ministry. Around 40 of CIL’s new projects are stuck in the no-go zones.

No-go classification
The ministry, under the then environment minister Jairam Ramesh, had announced the no-go classification in mid-2010, banning mining in major coal bearing areas. The move blocked the development of 203 coal blocks with reserves of a whopping 660 million tonnes (mt)–enough to fire a power generation capacity of 130,000 Mw. Apart from CIL’s projects, blocks allotted to two dozen companies, including NTPC, Hindalco Industries, Essar Power and Adani Power, were also falling under the no-go zones. A twelve-member ministerial panel, headed by Finance Minister Pranab Mukherjee, had in September last year decided to do away with the classification.

While the no-go system has been done away with, the environment ministry is now working on a new concept which will demarcate some mining areas as "inviolate areas", where mining will be prohibited, owing to their high quality of forest cover.

CIL claim rejected
A senior official from the environment ministry rejected CIL's claim that delay in green clearances were hurting production. "The company is raising a hue and cry to put the blame for reduced output on others. CIL has not developed even 10 per cent of the land in some forest areas approved by us for the company," he said. He also added that as the policy on "inviolate areas" is still under works, it cannot be a reason for delayed clearances as claimed by CIL.

Despite the lack of approvals for new projects, CIL reported a two per cent growth in its 2011-12 output. The world’s largest coal producer ramped up production in February and March to make up for a dip in output in the early part of the year.

This year, however, the pressure to meet supply obligations has increased manifold as the government forced the company to sign pacts with power producers at a higher commitment level of 85 per cent of demand.

Rao, however, is optimistic about meeting the challenge. The company is bracing itself to meet this year’s higher production target of 464 mt, in addition to the 70 mt supply commitment for new power projects. “Our capital expenditure is set to double from Rs 4,000 crore last financial year to Rs 8,000 crore this fiscal. This is apart from the Rs 6,000 crore to be invested in acquisitions of assets overseas,” he said.

A majority of the new investment this year would be channelized in buying heavy earth moving machinery for two subsidiaries — South Eastern Coalfields Ltd (SECL) and Northern Coalfields Ltd (NCL). The rest of the investment would go in land acquisition in new mines and improving railway sidings for speedier evacuation.

Rao also said his team had started applying for green clearances with the environment ministry afresh. The coal ministry had last January instructed state governments to submit revised proposals for projects stuck in the no-go areas, taking note of a formal end to the classification.

The government had scrapped the no-go plicy after the new environment minister Jayanthi Natarajan had agreed that the classification should not be for the basis for clearance or rejection of coal blocks.

The decision was based on a recommendation by a committee under Planning Commission member B K Chaturvedi, which said the no-go classification had no legal basis.