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SEP 24 2015

Streamline approval, development process of coal mines: PwC India

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 24th SEP 2015

The approval and development process of coal mines needs to be streamlined to achieve growth production of the fuel, consultancy firm PwC India said on Wednesday.

“Coal India Ltd was able to open new mines while even Schedule II coal blocks auctioned in the beginning of the year are yet to be operationalised fully. The key issue that winning bidders are facing is the delay in grant of all clearances and approvals that were expected to be granted as soon as the blocks were taken over by them,” the firm said in a statement.

Schedule II coal blocks under the Coal Mines (Special Provisions) Act were those mines that were already producing coal when the Supreme Court cancelled leases of prior owners last year.

These were the first to be auctioned in February-March earlier this year.

Delay due to litigation

Since the auctions, only around seven mines have come into operation with the delay happening due to ongoing litigation in some cases while in others, the statutory clearances and approvals have not yet been received.

“Subsequent to winning the coal blocks, the new owners face a challenge in starting operations within their budgeted capital outlay, improving productivity to lower operating costs and ensuring full compliance with regulatory and other requirements,” said Kameswara Rao, Leader Energy Utilities and Mining, PwC India.

The firm said that winners will now need to find mining contractors to develop the coal blocks in an efficient manner.

‘Be ready for risks’

“Post allocation, due diligence is required in getting all necessary approvals and clearances. Companies need to be prepared for various risks involved, which can derail a project,” PwC India’s statement added.

PwC India’s findings were released at a coal seminar arranged by the Indian Chambers of Commerce. At the event, the chamber’s National Expert Committee Chairman SK Roongta requested the government to make operations of new lease owners of coal mines smooth. He reiterated that State governments need to be brought on board and that all stakeholders must be brought on to the same page.

Raw material needs

The Indian Chamber of Commerce President Shiv Siddhant Kaul recommended that coal blocks with reserves greater than 100 million tonnes per annum and annual production more than 3 mtpa should be brought in for auction first.

He said that such a move would sustain the raw material requirement for the integrated steel plants.

“At the same time, a large number of coal fields earmarked for captive mining are notified under the Coal Bearing Areas (Acquisition and Development) Act. This may also be de-notified to speed up the ground work,” he added.

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