Rs 75,000-crore plan to free coal reserves

The government is planning to float three special purpose vehicles (SPVs) to evacuate coal locked across the three mineral-rich, Naxal-hit states of Chhattisgarh, Jharkhand and Odisha. Besides the three lines, 54 projects worth Rs 75,000 crore have also been identified for facilitating evacuation.

The move is part of a bigger plan by the National Democratic Alliance government to unshackle India’s energy sector from the traditional constraints of limited logistics and delays in environment clearances and land acquisition.

“Each of the three SPVs will have equity participation from Coal India Ltd (CIL), railway undertaking IRCON and the state government concerned. While CIL will contribute 66 per cent, 24 per cent will be pumped in by IRCON and 10 per cent by the state government. The memorandum of understanding for the first of these SPVs, for Chhattisgarh, could be signed as early as next week,” a senior government official said on condition of anonymity.

“The government wishes the projects be implemented by a professional body instead of the railways alone. CIL is anyway sitting on about Rs 50,000 crore of cash reserves and there is no sense in keeping this in banks,” the official, directly involved with the plan, added.

The coal ministry has drawn up an ambitious plan of nearly tripling India’s coal output from 565 million tonnes (mt) last financial year to 1.5 billion tonnes by 2020. Of this, an estimated 500 mt will be from the captive coal blocks being auctioned, while CIL will account for the rest.

The ministry has identified lack of evacuation infrastructure as a key constraint for meeting supply from CIL’s mines. The 54 projects will connect many coalfields in the three states with demand centres; they will also boost coal evacuation capacity by at least 200 mt through the next several years.

Last month, the board of CIL, the world’s largest coal mining company, had given its initial go-ahead to Chhattisgarh East Rail Ltd, a project that is part of the Chhattisgarh SPV. This will implement the East Corridor Rail Project. The 180-km East corridor will connect Kharsia-Chhal-Gharghoda-Korichhapar-Dharamjaygarh with Korba.

  • Government plans to ramp up India’s coal production from the current 565 mt to 1,500 mt over five years
  • 1,000 mt of this to come from CIL alone, but plan hinges on tackling evacuation constraints
  • Three SPVs will be set up, one each in Chhattisgarh, Odisha and Jharkhand, to free about 200 mt of reserves
  • Each SPV will have 66 per cent participation from CIL, 24 per cent from IRCON and 10 per cent from the state government concerned
  • The SPVs will construct three main corridors, apart from 54 other evacuation projects, with an investment of Rs 75,000 crore
  • CIL board has already approved one project – Chhattisgarh East Rail Ltd — and the SPV would be set up next week

Another rail corridor project, the East-West Corridor, has been planned by another SPV, with the same shareholding pattern. The CIL board, however, is yet to clear this project. The 54 evacuation projects are separate from the three critical rail lines proposed by the United Progressive Alliance government to free 300 mt of coal from the three states.