We do not have the rail connectivity to evacuate coal: S. Narsing Rao

Kolkata-based Coal India Ltd produces 82 per cent of the coal mined in the country, and is the biggest company by market capitalisation. Chairman and Managing Director S. Narsing Rao spoke to Business Today in Kolkata about the challenges facing the company and the sector. Excerpts:

Q. How serious is the problem of connectivity and of transferring coal from the mine to the customer?
A. Our coalfields have the potential to contribute to the incremental coal supplies to the country. Unfortunately, we do not have the rail connectivity to evacuate this coal. Three coalfields require just about 300-odd kilometres rail connectivity. With that, these can give us at least 300 million tonnes of additional coal production per annum, which can more than fulfil the thermal requirements of the country.

Q. Which are these three railway lines?
A. One is in the state of Jharkhand, linking Tori-Shivpur-Kathotia, about 100 km. This could give about 100 million tonnes incremental production per annum once the railway line is in place. The second is in Orissa, in the Ib Valley area. It is the Gopalpur-Manoharpur region, linking Barpali-Jharsuguda-Gopalpur-Manoharpur, which is just about 50 km. This, too, has the potential to give us an additional 100 million tonnes per annum. The third is in Chhattisgarh. This is Mand-Raigarh coalfields, which is about 180 kilometres distance and also has the potential to give us a minimum of additional 100 million tonnes per annum.

Today, we talk of a shortage of 150 million tonnes. Assuming in the next two to three years, demand grows by another 100 million tonnes, still we can be totally self-reliant as far as thermal coal is concerned in the country.

Q. Since when have you been seeking this rail connectivity, and what is the current status?
A. In Jharkhand, it was initiated as early as 1999. It is not as though we have realised it only today. The dialogue has been there with the railways, a proposal has been created, we have also made some advance money and work is going on. There are constraints and a combination of factors leading to this, especially on issues relating to land acquisition, forest and law and order issues. But, unfortunately it has taken 13 years and still it nowhere near completion.

Q. The railways talk of funding as a major issue and they have now come up with new funding models. Has that helped?
A. Indian Railways has resource constraints in its capital investments, but in this particular case, Coal India has agreed to invest 100 per cent of required capital, which has just been revised and is close to Rs 7,500 crore. This is to complete these three railway lines, and we have given a kind of unconditional offer to them to fund these.

Q. Are you hopeful about these projects taking off? Is there is any reason for hope?
A. Yes, there are reasons to feel more confident today, as we have escalated them to the highest levels in the government. The Prime Minister's Office is fully aware of this, and they have constituted an inter-ministerial group headed by the chairman of the Railway Board, with the coal secretary. This was done in June 2012, and we have held meetings, too. I would say there is some seriousness, but a lot more still needs to be done at the ground level in terms of forest diversion, environmental clearances, wildlife clearances, land acquisition and the law-and-order problem.

Q. What is the net impact of this as far as your customers are concerned? And your sales?
A. There is a huge impact. Today, there is about 100,000 MW capacity addition programme. This has been after March 2009. So far, 35,000 MW has been completed. The balance 65,000 MW is in various stages, and we are going to be in serious trouble if the coal for this is not made available. Secondly, currently, close to 100 million tonnes of coal is being imported by both power and non-power entities. As a student of economics, I can say this would also mean an impact on the current account deficit - if the 100 million tonnes of coal is replaced by domestic supplies, we could straightaway save $7 billion to $8 billion.