Coal Production Issues

  • The government has decided to offer 10 coal mines for auction
  • India is the third largest coal producer in the world. But it is also its third largest importer.
  • It will break the 41-year old domination of the state-owned Coal India Limited (CIL) over commercial mining
  • It will improve supply of the fuel, and its quality
Present scenario:
  • Current regulation restricts commercial operations to CIL — and Singareni Collieries Limited
  • It is the major reasons for the energy-strapped country not being able to tap the full potential of its coal reserves
Monopoly of CIL
  • Competition Commission of India (CCI) said that monopoly exercised by CIL is “patently unfair”.
  • It is found that CIL and its subsidiaries is “in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act, 2002, for imposing unfair/discriminatory conditions in fuel supply agreements with power producers”
  • Indian coal has about 45 per cent ash, much higher than the 25-30 per cent ideally required for the efficient burning of the fuel in thermal power stations
  • Geological factors are the primary reason for this lacuna
  • CIL’s overwhelming dominance of commercial mining has made the outfit stingy in investing in technology
  • Coal washing, for example — that increases the efficiency of coal. Less than 20 per cent of the coal produced by CIL undergoes coal washing.
  • Thermal power plants also have to reckon with stones in the coal they procure, which adds to their production costs and contributes to the wear and tear of their equipment

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