May 2, 2012

Speech in Rajya Sabha on ‘The working of the Ministry of Coal’

SHRI PIYUSH GOYAL (MAHARASHTRA): Thank you very much, Sir. Sir, the need the Government has to address today is not about theshort-term policies; it is not only about what is happening on a day-to-day basis. What is urgently required is that the Government come out with a fifty-year roadmap; they come out with a vision that this country is going to have to take care of the energy needs and the energy security of this country. I think, the biggest failure of this Government, apart from what my esteemed colleague mentioned earlier, is that this Government is devoid of the big picture. This Government is completely unable to make a plan which will address the energy security of this country.It is time the Coal Ministry, in consultation with the Planning Commission and the Environment Ministry, comes out with a solid plan which will take care of the energy needs of the country. After all, cheap coal power is the cornerstone of the economic growth of any nation. If you look at Europe: UK and Germany, from 1900 to 1950; if you look at the US from 1940 to 1970; or even if you look at China, in our neighbourhood, from 1980 to 2010, the growth was fuelled and driven by cheap coal power, and that, I think, will have to be the cornerstone of India’s growth. India, with the fourth largest reserves of coal, is today in a situation where one lakh megawatt of power is in various stages of development. Projects are stalled, banks are in dire crisis, rising NPAs in the banking system will kill the whole banking sector, but this Government has no vision, this Government has no plan as to how they are going to address the need of coal. The nation is faced with huge power cuts. We in Delhi or Mumbai are probably privileged to get power, but rural India, large parts of India, are suffering from huge power cuts because of the failure of this Government even to hold an FSA Committee meeting in the last twelve months. Sir, what we need to look at is the myopic policies of this Government which have lead us to this situation. We are headed towards an unmitigated disaster. There is likelihood of significant part of the power generation projects under construction or development becoming stranded or stalled for lack of fuel supply agreements. Based on the Government linkages, people have invested money in power plants. But the Coal India Ltd. – 85 per cent of coal comes from there – have failed to even meet their

targeted production. In fact, they are falling in production year on year; and how can we expect coal to be available for these power plants. The Prime Minister called a big meeting. The officials of the PMO were given the task of sorting out these problems. But,  three months have passed and nothing has come out of all those meetings. Today, we have a situation where even in an optimistic scenario, the domestic coal production from CIL will not go up beyond 450 million metric tons by 2016-17 and captive mines are estimated to produce 82 million metric tons by 2016-17. So, overall, we will have about 532 million metric tons as against the demand which, not on an optimistic basis but on a very conservative basis, will be nearly 817 million tons by 2016-17. So, we are clearly looking at a shortfall of 285 million tons in the next four years. And if the demand for these 285 million tons has to be met by imports, you can imagine the colossal demand-supply mismatch in the overall world supply of coal. Even if we have to import this coal, at a conservative price of 100 dollars a ton, we are looking at a 30 billion dollar outgo which will completely ruin the Balance of Payments(BOP) position. Trade deficit will rise; the rupee will devalue further and the cascading effect of that, the inflation that will be caused with rising power cost, it is going to be absolutely impossible to sustain the kind of growth that this Government is projecting.

SHRI PIYUSH GOYAL (CONTD.): And when we go out in the international market to import 285 million metric tonnes, Sir, the price will rise exponentially, and I don’t see the price sustaining at hundred dollars. And if that goes up to, say, the level of 150 dollars, just imagine the kind of crisis that India is going to face. Look at the cost of power. We will have a situation where power from coal which is today hovering around Rs.2.50 a unit will go up to Rs.6 a unit with rising interest cost and rising CAPEX on projects because of delays due to the inefficiency of this Government. With the need for imported coal which has been acknowledged by the Prime Minister’s Office in the last meeting, we are in a situation where the cost of power generated by coal will go up to Rs.6 a unit. And, all this happens when we have the world’s fourth largest reserve of coal! It is a very sad day. There is a complete lack of decision-making in the Government. The policy paralysis that the whole world is talking about is evidenced clearly in the Ministry of Power and the Ministry of Coal. And I think the failure of the Ministry of Coal is going to cost the country dear. It has taken India back by ten years, between the Ministry of Coal and the Ministry of Environment – it’s acknowledged by the Ministry of Coal in its Annual Report — there are about 200 environmental clearances which are pending. They cannot sort them out. Now, we have a situation where coal mining is stuck; new exploration is stuck; and power projects are stuck. The only thing this Government is good at, Sir, is in allocation of coal mines post-haste, without even following the due process or without any guidelines based on which coal mines should be allocated. Many earlier speakers have highlighted that. I will not go into the detail. But there are two details which have not come out in the earlier discussions. One, when they allot captive mines, the allocation of mine, the size of mine is disproportionately high compared to the requirement. And that is one way where scam gets hidden. They may have given a mine for cheap power for the State, but the disproportionately high reserve is where the scam lies. And the second is the allocation of mines to State Governments and State companies. The method in that is that the mine is allocated to a State or to a State Corporation. They enter into a JV with a private party and, in effect, pass on the mine to a private party without following the due process and that is where even the Government allocated mines need to be scrutinised in great detail. The entire allocation of mines from 2004-2009 needs to be scrutinised all over again. The Coal Controller himself has acknowledged that only 28 or 29 mines to date have been taken up for production out of almost 195 blocks. And the Government says that it has cancelled 25 allocations. I went through that list. It is on page 94 of the Standing Committee Report. I fail to understand how some mines are cancelled after ten years while some are cancelled in two years. There is no process. What about the 160 odd mines which have not yet been started? What are they doing about that? What about the 50 recommendations for cancellation since January which has not been acted on? What about the showcause notice? No action on any of them has been taken. I think the Supreme Court is going to come down heavily on it. It has already stated that auction of natural resources is the right method and this Government will have to review all these allocations before the CAG Report comes out. Like the Prime Minister mentioned, there could be some foreign hand in the nuclear protests, I wonder whether starving this nation and its power plants of coal also is the handiwork of some hidden hand which this Government is protecting. I think it is high time the Coal Ministry in consultation with the Ministries of Power and Environment and Forests made a visionary road map to get the country out of the mess that they brought us in. Thank you, Sir.


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