Coal ministry readies host of reforms for the next five years

After opening up the coal mining sector to the private sector and taking steps to boost domestic coal production, the Ministry of Coal is now readying marketing, quality, and environment reforms in the sector. The ministry is drafting a new set of key performance indicators for the next five years.

The five-year action plan, reviewed by Business Standard, proposes to introduce marketing reforms early next year. The ministry plans to launch ‘one nation-one grade-one rate’ by clubbing different coal auctions into a single auction window. This is the coal offered by Coal India (CIL) and its subsidiaries in the open market.

Since multiple baskets of coal auction will be clubbed, coal will be offered company-wise. CIL has seven companies as its subsidiaries. “This will enable uniform grade and rate of coal in the market. Coal will be offered company-wise via e-auction,” said an official.

The ministry plans to float a note for the Union Cabinet’s approval by February and kick-start the new auction process by the middle of next year.

The e-auction of coal by CIL includes spot e-auction, special forward e-auction for the power sector, exclusive e-auction for non-power consumers, special spot e-auction, and special spot e-auction for coal importers.

Additionally, since 2017, CIL has hosted coal e-auction under the Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) scheme. SHAKTI was launched in 2018 to provide coal to stressed power units which lack coal supply.

To further strengthen the efforts to improve coal quality, which is indirectly linked to India’s climate commitments of adopting clean coal technologies, the ministry will also overhaul the ‘sampling and quality check’ system for coal. “The ministry will aim to remove the monopolistic arrangements in third-party sampling (TPS) agencies and increase the number of companies. CIL will allow e-auction to test samples from the coal stock through their own agencies before participating in the e-auction,” said the note.

Currently, TPS is done by CIL-appointed agencies. CIL claims the testing and analysis of coal samples are carried out by a third party at independent coal-testing labs, according to the Bureau of Indian Standards. The sample is collected from coal supplied to the consumer at the loading point. Many private players have long complained about quality mismatch in e-auctions by CIL and have alleged lack of transparency in the TPS process by CIL. The ministry also plans to set up a coal trading exchange. The timeline placed the launch in 2023, although a consultant has been hired, said officials.

This paper had reported earlier that the Ministry of Coal would offer 60 projects worth Rs 41,042 crore for private investment, increasing the government’s national asset monetisation target to Rs 2.9 trillion. These projects include coal washeries, coal gasification, first-mile connectivity for building coal silos/mechanised loading, and offering mines to private companies under the mine developer and operator route.

Officials said most projects are aimed at improving the quality of coal and be in line with the new climate targets that will be set in once the net-zero trajectory is finalised. India has declared 2070 as the target year for being a net-zero carbon economy.  

TRANSITION PLAN

• Action: To bundle all coal auctions on Coal India into single window 
• Reason: Aimed at standardising quality and rates of coal
• Action: Include more players in third-party sampling, allow consumers to do so
• Reason: To reduce complaints and tussles against coal quality 
• Action: Enhanced investment in improving coal gasification, coal bed methane
• Reason: Part of India's climate commitments to decarbonise coal sector
• Action: Set up a coal trading exchange
• Reason: Coal to be available to any industry, any consumer at any time