Date | Feb 06, 2017:

Forty-four years after creating a state monopoly in coal, it is welcome that the government has decided to permit commercial mining of coal, which remains our main source of commercial energy. Mining and evacuation without specifying end-use would allow specialist coal producers to realise economies of scale and scope and competitively seek custom. The extant policy of a coal monopoly supplemented with captive mines, whether allocated by auction or not, is hugely inefficent and gives rise to a host of rigidities. And at huge national cost.

In recent years we have imported upwards of Rs 1 lakh crore of coal, never mind our large proven reserves, thanks to much policy dithering. The coal secretary has reportedly declined to identify the coal blocks, the estimated reserves contained in them, or specified the auction methodology to be followed. Instead, the Centre plans to issue a consultation paper on commercial mining of coal, which is sensible. The way ahead is to transparently overhaul market design and oversight, so that efficient producers can gainfully boost output and supply at fine rates. In tandem, we need improved environmental norms for cent-percent beneficiation of coal in a timebound manner. We simply cannot afford to ferry millions of tonnes of noncombustible shale and rock, wasting energy on haulage and pre-empting freight capacity.

In parallel, we do need to purposefully coagulate resources to handsomely rev up thermal efficiency in our power plants, which are by far the single-biggest users of coal. Proven methods like ultra-supercritical boiler technology would optimise power output at thermal stations and rationalise attendant fuel logistics. We need proactive policy to step-up efficiency improvements right across the supply chain in coal. Following the Supreme Court’s summary cancellation of 214 captive coal blocks awarded from 1993, bidding interest for captive coal blocks has been largely muted since 2014. Now that international coal prices have begun to harden again, a better response can surely be expected.

(Source: http://blogs.economictimes.indiatimes.com/)