In a move which is likely to generate greater revenue for State-owned Coal India ltd (CIl) as well as address its long standing dry fuel supply problem to power stations, an inter-ministerial panel headed by Planning Commission Member (Energy) B K Chaturvedi has okayed a proposal wherein the Maharatna company's mines would be leased to private entities for faster evacuation of the natural resource.
Known as the mine-develop-operate (MDO) model which is based on the public private partnership (PPP) concept, it was under consideration since the last one year and according to sources privy to the development, the inter-ministerial panel led by Chaturvedi (having representatives from Coal, Steel, Mining, law and Finance Ministries) has recently okayed its implementation.
The Coal Ministry is mulling declaring Mahanadi Coal Field's (MCl, a subsidiary of CIl) Siarmal Opencast Project as a pilot project for implementing the proposed MDO model, sources added. Under MDO, private companies having modern coal evacuation technology would be given CIl's mines on a 15 year lease, during which they will develop the reserves on the Maharatna company's behalf. The advantage here would be that owing to state-of-the-art technologies possessed by these companies, not only will it result in faster extraction of coal, but would also consequently put on fast track the supply of coal to thermal power plants. NTPC, which is a major buyer of CIl's coal, has always complained of delay in supply of the dry fuel owing to which its plants are forced to run at half their capacities. Thus by adopting the MDO model, not only will it help CIl address the coal supply problem but also attract greater revenues for its coffers.
Sources further said that the MDO model will now be sent for CIl's consideration and its board is likely to clear it soon. Official sources said that the CIl mines would be offered to interested entities along with the detailed mining plan so that those developing these would have an accurate idea of the quantity of coal available in them. With even Coal Minister Sriprakash Jaiswal keen on getting the MDO model implemented, CIl's board approval for the concept is being seen only as a mere formality, sources added.
Jaiswal had been quite vocal about putting coal production on the fast track, especially after the issue of poor supply of the dry fuel to power producers had led to the issuance of a Presidential Directive in 2012 by the Coal Ministry, wherein CIl was asked to sign fuel supply agreements (FSAs) with power producers assuring them of at least 80 per cent of the committed coal delivery. In fact all the subsidiaries of CIl too had been mobilised by the Coal Ministry to ensure unanimity in the adoption of the MDO model. The model is likely to be implemented by the end of the current fiscal.