COAL POLICY

MARCH 21, 2024

Ashwini K Swain
 INDIA: PRIMARY
ENERGY MIX

• Coal – 44% (Global 25%)

• Oil – 25% (Global 30%)
• Natural gas – 6% (Global 22%)
• Biomass – 13% (Global 6%)
• Renewables – 3% (Global 13%)
• Over two decades
• Coal share gone up from 33% to 44%
• Biomass share dropped from 26% to 13%
• High import dependency
• About 80% of oil & gas
• About a quarter of coal
WHERE IS THE COAL?
COA L I N P R E- IND EP END ENT IN DIA
 COAL IN INDEPENDENT INDIA

• Independent India inherited 900+ mines operated by 200+ companies

• Producing about ~30 MT coal
• Unorganized, safety concerns, lack of proper market
• Industrial Policy Resolution 1956
• National Coal Development Corporation
• Singareni Coal Collieries Limited
• 1971-1973 – Nationalization of coal
• 1973 – The Coal Mines Authority Limited
• 1975 – Coal India Ltd
• From Coal as a symbol of ‘colonialism’ to coal as a symbol of ‘nationalism’
• CIL role in local development – proxy state
• Centralization and adaptive state capitalism
• Coal, railways & NTPC
 CIL

• Single largest coal producer in the world

• Mining operations in eight states in India & Mozambique
• Major share in five states – Chhattisgarh, Jharkhand, Madhya
Pradesh, Odisha & West Bengal
• The second largest SoE employer
• Locally embedded
• From 79 MT to 780 MT (2023-24 target)
• 703 MT in 2022-23
• A maharatna company
 CIL – FINANCIAL
PERFORMANCES

• Increase in profit driven by growth in net

sales
• Surge by INR 27,065 crores
• 5% increase in offtake
• Better realization per tonne
 COAL INDIA -
ORGANIZATION
STRUCTURE
 CIL – SOCIAL &
RELATIONSHIP CAPITAL

• Coal mining operations have intricate connections with

people and communities. Stronger bonds between the
Company and its stakeholders help forge sustainable
relationships that bolster the foundation of our people-
centric approach.
• CIL consistently ranked among top 10 companies in India
for CSR spending
• Women & child development
• Promotion of sports
• Agriculture and rural development
COAL PRODUCTION & IMPORT
 STATE CAPITALISM

• State capitalism – state as entrepreneur

• Public sector or State-owned Enterprises or Public Sector Entreprises
• About 250 companies
• 20-25% of GDP (since early 1990s)
• About 1.2 million formal jobs
• Roughly two-third are profitable
• Top 10 account for two-third of profits
• Bottom 10 account for > 80% losses
• CIL accounts for 15% of profit
• Public sectors has consistently outspent the private sector in infrastructure
• While its share declined from roughly three fourth to less than half
INDIA’S LARGEST FIRMS BY SALES
 ADAPTIVE STATE CAPITALISM

• Bureaucratic Discretion – The ability for bureaucrats/state managers to take large,

consequential actions and decisions without seeking approval from a higher authority
• Organizational Capacity – The ability to use internal resources, knowledge, and processes to
undertake complex projects and execute them successfully, within reasonable timelines
• Resource Self-Sufficiency – The ability to finance new projects, raise money from capital
markets and commercial banks, and cover all liabilities using solely internal financial resources,
without budgetary support from the government
• Political Influence – The ability to manage political pressure from all levels (local, state, and
national), strike appropriate deals when needed, and if required, mobilize networks within and
outside government to prevent unreasonable demands on the company
• Rule Shaping – The ability to lobby within the bureaucracy (and possibly political circles) for
policies and rule changes that are beneficial to the company
 • First three are reflections of a competent commercial organization
• Few private companies can aspire for the final two

CIL & ADAPTIVE

STATE
CAPITALISM
 CIL & ADAPTIVE STATE CAPITALISM

• Four periods in the trajectory of India’s coal industry

• Pre 1971 – multiple small private companies – legacies of colonial managing agencies
• 1971 -1991 – CIL as part of India’s larger socialist industrial project directed by the
Central government
• 1991 onwards – profit motive shaped by economic liberalization
• 2000 onwards – operational autonomy
 CRIMINALIZATION OF THE COAL
INDUSTRY

• The Coal Mines Nationalization Act, 1973

• ”approved end uses” - a handful of industries: power, cement, railways, steel, sponge
iron and a few others which could be additionally notified by the Central government
• ignored the extensive dependence of SMEs on the coal industry: brick kilns, cotton
mills, glass factories and many other small industrial units
• A small amount of coal was made available to State governments for sales to SMEs,
but these allocations were often insufficient.
• SMEs scattered around West Bengal, Bihar and Uttar Pradesh all became illegal users
of coal overnight
• Organized labor mobilization
 GOVERNANCE OF COAL

• The Ministry of Coal has the overall responsibility of determining policies and
strategies in respect of exploration and development of coal and lignite reserves,
sanctioning of important projects of high value and for deciding all related issues.
• Mines and Minerals (Regulation and Development) Act 1957
• Schedule one mineral - while ownership of coal resources vests with state, prospecting and
mining are controlled by central government
• National Mineral Policy
• Mines Act, Forest Conservation Act, Environmental Protection Act
• CPCP, MoEFCC, Ministries of Labor, Finance, Railways, Power, Industry, Steel,
Transport.
 INDIA’S COAL
VISION

Modern, sustainable and

competitive coal sector enabling
accelerated coal production for
energy security and economic
growth
 KEY ACHIEVEMENTS

• About 50% growth in domestic coal production

• 133% growth in captive mining from 53 MT in 2014-15 to 23 MT in 2022-23
• Launch of commercial coal mining in June 2020
• Allocated 152 mines with cumulative peak rated capacity of 553 MT
• 52 mines are already operational
• 67 first mile connectivity projects worth ~ INR 21,000 crore sanctioned (885 MT Capacity)
• 14 railway projects worth INR 26,000 crore
• Converting 16,262 hectares of land to green cover (nearly 1 mt CO2 carbon sink)
• Reforms – rationalization of coal linkage, single window clearance system, third party quality
check, 100% FFDI in coal mining
 Ashwini K Swain
ashwini@sustainablefutures.org
+91 8800334848