1. 6th Coal Summit Indian Coal – Sustaining the Momentum
Coal Policy Initiatives
6 Sept.2016, New Delhi
D.N. Prasad
Ministry of Coal

2. Energy Policy & Role of Coal
Pursue all available fuel options;
Go for more competitive energy markets, transparent subsidies, improved efficiencies across the energy chain;
Adopt policies that reflect the externalities of energy consumption;
Currently Coal is the main stay of India’s Energy with over 55% of primary energy supply and over 75% of Electricity Generation;
Situation is likely to continue for quite some time in to the future;

3. Intended Nationally Declared Contribution (INDC)
Amongst others, India Committed:
To reduce emissions intensity of its GDP by 33-35% by over 2005 levels;
40% of the cumulative electric power installed capacity to be non-fossil fuel based energy resources by 2030;
To create an additional carbon sink of 2.5 to 3 billion tonnes of CO2 equivalent through additional forest and tree cover by 2030;

4. Challenges post CoP-21
In the period up to 2030, the economy is expected to grow to 8-10% which would result in greater demand for energy;
Also by 2030 it is expected that there will be universal access to electricity;
Per capita electricity supply envisaged to be more than Kwh per year compared to 1010 Kwh per year;

5. Challenges post CoP-21 (contd.)
The INDC commitment of 40% cumulative electric power installed capacity from non fossil fuel based energy resources by 2030 will be met by a range of resources including hydro, nuclear, wind, solar etc.;
The annual generation capacity from these sources would be around 1.03 trillion Kwh;
The balance would be met through coal based capacity of about 400 GW;

6. Projected Coal Requirement (mt)
In , 600 mt for a generation programme of 921 BKwh;
In , 747 mt for a generation programme of BKwh;
In , 845 mt for a generation programme of BKwh;
These projections include requirement of 50 mt for import based plants during these years;

7. Highlights of Coal Sector - 2015-16
Over all coal production: 638 mt (4.8% growth); Growth in CIL – 8.6%;
Import of coal : mt;
(Coking Coal mt; Non-Coking Coal – mt)
Overall lignite production: 44 mt (-) 8% growth);
Overall coal despatches: mt(4.6% growth);
Supply to power sector: 566 mt (2% growth) [which includes mt of imports];
Total generation: 1108 Bkwh (5.6% growth);
Coal based generation: 896 Bkwh (12% growth) & forms 81% of total generation;
Out of 302 GW of total capacity, 185 GW or 61% is coal based;

8. Initiatives No shortage of coal for power plants;
27 days inventory against 15 days earlier;
Rationalisation of coal linkages for 19 power plants resulting in a savings of about Rs.1500 crore in freight (25 mt of coal);
Improved coal quality through third party sampling;
Emphasis on rail infrastructure development for coal evacuation;

9. Initiatives (contd.,)
Demand stimulation through Special forward e- auction for power ( offer of 6mt every month);
Exclusive auction for non-power every month (2 mt on offer);
Import substitution;
Offer to import based plants as well;
Bridge linkages for captive block holders;
Coking coal fro new consumers through auction;

10. Initiatives (contd.,)
On cancellation of coal blocks by the Supreme Court in September 2014:
Ordinance issued on and Act passed on for auction of blocks;
Auction to private companies and allotment to PSUs;
83 coal blocks (31 to private & 52 to PSUs) allocated of which 50 are for power and seven for commercial purposes;
States to receive Rs.3.53 lakh crore over lifetime of coal blocks;
Rs.1877 crore already transferred to states;

11. Initiatives (contd.,)
Policy for development of Underground Coal Gasification approved;
Action Plan drawn for offer of identified blocks;
CIL permitted to extract coal bed methane on commercial lines;
Special emphasis on reclamation of mined out land and monitoring;
Rigorous afforestation;

12. Details of Coal Marketing Policy

13. (A) E-auction Scheme
New Coal Distribution Policy (NCDP), 2007 aimed at distribution of coal in a transparent way to all sections of consumers;
Two schemes of e-auction launched: Spot E-auction and Forward E-auction
The aim was to cater to:
Spot- Buyers having seasonal/ limited requirement of coal;
Forward- Actual Consumers for assured supply over a long period (one year);
Earmarked quantity around 10% of estimated annual production;

14. E-auction Scheme (Contd.)
Eligibility:
Spot E-auction: Any Indian buyer
Forward E-auction: Industrial consumers (end users), wish to have advance planning for procurement of coal (one year)
In , two special schemes were launched
Special Forward E-auction for power producers
Exclusive E-auction for non-power consumers
Consumers not having coal block or linkages or long term PPAs
Consumers having regular linkages may also participate in Special & Exclusive forward e-auction for own consumption only

15. E-auction Scheme (Contd.)
Special Forward E-auction scheme for Power Sector
(commenced from ) Million Tonnes
(April to July’16) Million Tonnes
Exclusive E-auction scheme for non-power sector
(commenced from ) Million Tonnes

16. Steps taken for ease of doing business
EMD reduced to Rs. 200/- per tonne for all grades of coking and non-coking coal for Spot and Forward auction from earlier Rs. 400/- to Rs. 500/- per Te;
Reduced reserve price for coking coal in spot e-auction from 30% to 20% and in forward e-auction, from 60% to 20% above notified price for non-regulated sector;
The reserve price in Special E-auction for both power & non-power sectors has been reduced from 20% to 10% over the notified price for the applicable sector;
For EMD, instead of cash, Bank Guarantee (BG) also permitted;

17. Steps taken for ease of doing business (Contd.)
Bidders can bid for coal requirement for 3 months and 6 months period under Special and Exclusive forward e-auction with lifting period of 6 months and one year respectively;
To facilitate advance coal procurement planning by the consumers, monthly auction quantity calendar for August-March, already notified;

18. Performance Overview: Summary of E-auction of CIL for 2015-16 (Fig in million te)
Spot
Forward
Special Forward e-auction for Power
Exclusive
e-auction for Non-Power
Total
Qty offered
88.6
13.3
14.5
4.0
120.3
Qty allocated
57.4
5.9
13.8
1.5
78.6
% increase over Notified Price 34 29 36 31

19. (B) Auction of coal linkages for non-regulated sector
POLICY GUIDELINES
MoC issued policy guidelines after approval by the Cabinet Committee on Economic Affairs (CCEA) in Feb., 2016;
Allocation of linkages through Non-Discriminatory Ascending Clock E-auction, a transparent on-line bidding mechanism;
Proportion of coal allocation of production: 75% Power and 25% Non-power (based on average of last 5 years’ dispatch);
All allocations of linkages/LoAs for non-regulated sector shall be auction based from now on;

20. Policy Guidelines (contd.)
No premature termination of existing Fuel Supply Agreement (FSAs);
No renewal of existing FSAs maturing with effect from 31st March 2016;
The existing FSA with CPSEs may continued to be renewed on expiry;
The extant coal supply arrangements to continue till commencement of coal supply under the auction process;
Tenure of FSAs : 5 years, extendable to another 5 years (maximum 15 years);

21. Policy Guidelines (Contd.)
Separate quantities shall be earmarked for sub-sectors of non- regulated sector;
The sub-sectors could be: Cement, Steel/Sponge Iron, Aluminium and Others [excluding Fertilizer (Urea) sector], including their CPPs etc.;
The sub-sectors shall compete within themselves;
CPSEs requiring coal above the existing linkages, may participate in auction of linkages;

22. Policy Guidelines (Contd.)
There shall be provision for third party sampling for coal supplies;
In the first tranche around 24 Mt of coal offered by CIL;
The quantity put up for auction is the sum of:
quantity available from expiry of FSAs of non-regulated sector [except CPSEs and Fertilizer (Urea)] in onwards;
25% of incremental CIL production during over ;

23. Envisaged benefits of auction of linkages over existing NCDP/ FSA provisions
EARLIER
NOW
Linkage quantity was 75% of Normative quantity
Linkage quantity will be 100 % of Normative quantity
Consumers did not have freedom to choose source of supply as per their requirement
Consumers can choose source of supply.
Transportation cost varied as per allocation of sources
Transportation cost can be factored.
Third party sampling provision only for consumers with ACQ > 4 Lakh MT
Now available to all
Transparent access to resources

24. Conduct of the auction
The sub-sectors for auction are Sponge, Cement, CPP and Others, apart from coking coal for steel sector;
CIL held interactive sessions with the subsidiaries as well as various stakeholders;
Twice Pre-bid meetings for each sub-sector at various places;
‘Scheme Document’ for implementing the Auction prepared taking the stake holders suggestions into account;
Various consumer friendly measures such as compulsory 3rd party sampling, exit option, doing away with incentive, delivery from specified mine/siding, back-up mine in the event of Force Majeure, etc. were introduced;

25. Conduct of the auction (Contd.)
Sectoral normative requirements determined on the basis of CIMFR report/ CEA norms;
Sources identified after mapping the sector-wise demand/preference and past trends of sector-wise dispatch;
The total offer for Sponge Iron sub-sector was 3.78 Mt out of which 2.05 Mt was booked in the auctions conducted from to ;
The total offer for Cement sub-sector was 2.15 Mt out of which 0.68 Mt was booked in the auctions conducted from to ;
Auction for the CPP sub-sector scheduled from onwards

26. Way forward
Enhancing coal production through sustainable mining practices;
Demand stimulation;
Import reduction;
Quality assurance;
Coal Evacuation infrastructure;
Resource allocation;
Clean Coal Technologies;

27. THANK YOU