Coal India strike seen blunted by ample stockpiles
India’s ample coal stockpiles may blunt the power of unions planning a strike at Coal India Ltd., the world’s biggest miner of the fuel.
Labour groups including All India Coal Workers’ Federation are demanding the company start early wage talks and begin recruiting to fill vacancies, as well as calling on the government to stop selling its shares of the company. The one-day strike scheduled for 2 September may cut output by about 1.5 million metric tons from the Kolkata-based miner, which produced 536 million tons of coal in the year ended 31 March.
“The problem for the unions is the days of coal shortages are over,” said Goutam Chakraborty, a Mumbai-based analyst at Emkay Global Financial Services. “Coal India can afford to lose a day’s production, rather than agreeing to an unreasonable demand.”
Trade unions at Coal India have used strikes as a tool to achieve goals from higher wages to an increase in bonus payments. This time, the threat comes before talks to revise non-executive wages. The company is aiming to reach 1 billion tons of annual output in four years, while curbing costs to protect profitability.
‘No chance’
“We have plenty of coal stocks to meet any shortfall in production,” said R. Mohan Das, Coal India’s director personnel & industrial relation. “The unions have asked for a 50% increase in wages. There is no chance we can agree to that.”
About 95% of Coal India’s more than 300,000 workers are supporting the strike, All India Coal Workers’ Federation General Secretary D.D. Ramanandan said.
Also Read: Coal India workers call for nation-wide strike on 2 September
“The strike is on and there is no likelihood of calling it back,” Ramanandan said, adding that all but one major workers’ union is supporting the strike. “Neither the company management nor the government is talking to us now. But, we will force them to talk.”
The Bharatiya Mazdoor Sangh, a union backed by the ruling party, isn’t joining the strike, Pradeep Dutta, a general secretary at the union’s mining unit, said by phone.
‘Comfortable inventory’
Power plants are awash with coal, compared with earlier situations when even a day’s disruption in output could cause blackouts in parts of the country. India’s power plants had coal stocks of a combined 29 million tons as of 23 August, which would last them an average 21 days, according to India’s Central Electricity Authority.
Coal India revises non-executive salaries every five years and the next revision is due from 1 July. The company holds meetings with union representatives before deciding on the revision.
“Given the comfortable inventory of coal in the country, Coal India will not face any supply issues because of a one-day strike,” said Abhisar Jain, an analyst at Mumbai-based Centrum Broking Pvt. “Coal India does have a strong cash reserve and has an ability to pay. But it has to ensure that there isn’t a big blow to profitability.”
For the five years ended 30 June, Coal India increased non-executive gross salaries by 25% and topped it up with another 4% increase in basic salaries. Centrum’s Jain said he expects an increase of 20%-25% “in case of very hard negotiations.” Anything more than that will be seen as negative, he said. Bloomberg
Panel on coal requirement by Sasan Power to meet next week
An inter-ministerial panel (IMC) will meet next week to examine and recommend the actual or maximum requirement of coal by Reliance Power's arm Sasan Power.
"Chairman, IMC, has been pleased to grant September 2, 2016 (Friday), as the date for convening the meeting," according to the meeting notice.
This meeting, which was earlier scheduled for August 24, had to be postponed because of some unavoidable circumstances.
The six-member panel headed by Chairman of Central Electricity Authority, which was set up in April has members from the power and coal ministries.
Coal Controller and Director (Technical), CMPDIL are also members of the committee.
The terms of reference of the committee are to examine and recommend the maximum requirement of coal per annum for Sasan Power Ltd based on the actual station heat rate, gross calorific value and plant load factor, the memorandum added.
The committee will also examine the actual performance of Sasan power plant on station heat rate vis-a-vis the figure projected by them in their bid document and ascertain the reasonableness of the difference between the claimed one and actual achievement, it said.
Reliance Power had earlier said that its arm, Sasan Power Ltd, which runs a 4,000-Mw ultra mega power project, has received Coal Ministry's nod to produce 17.20 million tonnes per annum (mpta) of coal from the Moher & Moher Amlohri extension mines.
The Coal Ministry had earlier directed Sasan Power Ltd to limit annual coal production at 16 mpta.
Steel Ministry seeks higher supply of coking coal
The Steel Ministry has approached the Coal Ministry asking for increased availability of indigenous coking coal in order to reduce dependence on import of the fossil fuel.
"The Steel Ministry wants more availability of coking coal for steel plants of SAIL and RINL. As a result, Steel Secretary Aruna on Thursday met Coal Secretary Anil Swarup," an official said.
The Steel Ministry wants to reduce dependence on imports, the official said, adding that it also asked the Coal Ministry to allocate coking coal blocks.
Earlier this year, the government had said that efforts were being made to increase the availability of indigenous coking coal in the country in order to reduce the import of the fossil fuel which is mainly used in production of steel.
Import of coking coal by domestic steel industry crossed 45 million tonnes (MT) in 2014-15 as against about 39 MT in 2013-14, according to Assocham.
It is likely to touch 180 MT in the wake of the country's ambitious target of producing 300 MT of crude steel per annum by 2025, the industry body has estimated.
Besides, the coking coal import has increased from 13 MT in 2003-04 to over 39 MT in 2013-14 and during the same period the dry fuel production dropped from about 18 MT to 14 MT and supply of washed coking coal to steel plants was only 6.6 MT in 2013-14, Assocham had said.
"This is resulting in a loss of forex reserves, stress in inland transportation and logistics and congestion at ports, as such it is imperative that indigenous production of coking coal is given a big thrust," it said.
Railways coal freight rate revision to hike costs: Power firms
The railway ministry on Tuesday revised freight rates for coal, leading to an increase in transportation cost for plants located 200-700km away from the mines and a reduction for those situated further away.
While the private sector power producers said it will raise power generation costs for several plants, the railways maintained the exercise was revenue-neutral for the national carrier.
According to Railway Board member (traffic) Mohammad Jamshed, the freight rates were raised by 8-14% for transporting coal between 200km and 700km and were lowered by 4-13% for distances above 700km. Freight rates for distances up to 200km were kept unchanged.
While an official with state-run power producer NTPC Ltd said on condition of anonymity that the increase “may not lead to a drastic rise in power generation cost”, private power producers said the new freight rates will warrant a power tariff increase.
“During a railway board meeting, it was decided to rationalize the coal tariff by changing the distance slabs. This revised freight rate is applicable from today,” said Jamshed. He added that the tariff revision will make coal transportation from mines cheaper over long distances.
“About 60% of the power plants in India need to transport coal for 200-700km, where there is an increase in the freight rate. For them, there is a likely cost increase of 6-7 paise per unit of power. For the others, the impact is negligible,” said Sushil Maroo, executive vice-chairman at Essar Power Ltd.
According to Lalit Jain, group chief commercial officer of Hindustan Power Pvt. Ltd, the rail freight rate increase including the additional coal terminal surcharge of Rs.55 a tonne on loading and unloading will warrant an increase in energy tariff from coal-based power plants by 8-10 paise per kilowatt hour.
“This is yet another increase for coal-based power plants after the recent increase in clean energy cess and coal price which shall further increase end user power cost. Inability to pass on such tariff shall further deteriorate financial condition of distribution companies and power generators,” said Jain.
An official with NTPC said the utility was in the process of figuring out impact of the changes.
“The changes, we believe, have been carried out with the intention that power generation cost should not go up drastically,” said the person, who asked not to be identified.
Jamshed of Indian Railways said the rate revision was revenue-neutral for the national carrier because the hike for some distances is being complemented by the tariff reduction on long routes.
“We are trying to encourage long-distance coal freight through this move, and it will benefit several industries and thermal power plants,” said Jamshed adding a coal terminal surcharge at the rate of Rs.55 per tonne at both the loading and unloading terminals for traffic of coal for the distance beyond 100 km will also be levied.
According to the railway ministry, more such steps are on the anvil in the near future through innovative schemes such as liberalized station-to-station rates, long-term tariff agreements at pre-determined price escalation principles and further liberalized empty flow direction policies.
Jain of Hindustan Power said the burden of Railways’ resource mobilization should be shared by every one and not just the stressed power sector.
Court decision to charge former coal secretary Harish Chandra Gupta may paralyse bureaucracy
A policy paralysis can strike the central government because of shock and anxiety in the bureaucracy over a court's decision to frame coal-scam charges against former coal secretary Harish Chandra Gupta, widely regarded as an honest man, top officials and the IAS association said.
Gupta, a pensioner facing trial in 10 cases involving arbitrary allotment of coal mines, recently said he was ready to face trial from jail because he could not afford lawyers, evoking strong support, sympathy and anger in the civil service.
He retired in November 2008 after serving as coal secretary for two years, and had earlier earned a reputation of integrity in the defence ministry where he handled production, supplies and acquisitions. Sanjay Bhoosreddy, secretary of Central IAS Officers Association, told ET that Gupta had declined financial help from the association but was ready to take legal support.
"There is a policy lacuna as the Anti-Graft Act doesn't protect retired officials. This may lead to policy paralysis," he said.
Niti Aayog CEO Amitabh Kant told ET that he believes there is no corruption or mens rea (criminal intent) involved in Gupta's case. "Errors in commercial decision making should be de-criminalised. There cannot be a more honest person than Gupta-...he is an upright officer who leads an extremely simple life. What has happened with him is a travesty of justice," Kant said. He had earlier tweeted that Gupta's case was "real travesty of justice. Sad and tragic".
Another senior secretary questioned how the Supreme Court could stay proceedings against then Prime Minister Manmohan Singh in a coal scam matter but let the cases go on against the then Secretary HC Gupta. "There is no forum of appeal for Gupta as the trial court judge is reporting directly to the SC," the other secretary said, speaking on condition of anonymity.
Top bureaucrats and officials who had worked with the former civil servant said the "hounding" of an honest official eight years after retirement would demoralise the current crop of decision makers and discourage them from taking any decision.
A secretary-level official said decision making would be paralysed.
"He is more honest than I am or anyone of us here is," said a secretary presently working in the Government of India. "If he is jailed, functioning of the government will come to a grinding halt. There already too many concerns, if such things happen no one will take any decision," he said on the condition of anonymity.
Gupta's colleagues who worked with him during his tenure in the coal ministry supported his decisions. "As chairman of a screening committee, one cannot be expected to verify or doubt facts that are presented to him, unless there is some evident malafide," said a senior official who has worked with Gupta.
Pakistan's coal expansion project brings misery to Thar desert
Thario Halepoto village is located in the Thar desert in South Eastern Pakistan, around 400 kilometres east of the port city of Karachi. You can hear the scream of peafowl and bells sounding around the necks of grazing goats and cows. Women wearing colourful clothes carrying water pitchers on their heads walk between the sand dunes.
There are around 1,000 households in the village, the majority of them part of the Halepoto clan. But life here is about to change, with the arrival of Chinese and Pakistan joint venture to excavate the massive coal deposits that lie beneath the sand and build coal fired power stations to meet Pakistan’s energy demands.
A dream becomes a nightmare
Mehmood Halepoto’s family has lived in this village for centuries. Like other residents, Halepoto is a herder who ploughs the fields when it rains. In 1990, officials came looking for coal and found huge deposits under the village.
The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species.
Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. About 25% of the people live within the proposed coal development area. They thought they would benefit, but that has not been the case.
“We were happy, as people told us we would be rich, but now, this has turned into a nightmare and the black gold has become a black snake that is displacing us from our ancestral land,” he told thethirdpole.net.
Thario Halepoto village is located in the Thar desert in South Eastern Pakistan, around 400 kilometres east of the port city of Karachi. You can hear the scream of peafowl and bells sounding around the necks of grazing goats and cows. Women wearing colourful clothes carrying water pitchers on their heads walk between the sand dunes.
There are around 1,000 households in the village, the majority of them part of the Halepoto clan. But life here is about to change, with the arrival of Chinese and Pakistan joint venture to excavate the massive coal deposits that lie beneath the sand and build coal fired power stations to meet Pakistan’s energy demands.
The residents of the Thar Desert are totally dependent on groundwater and rain for drinking water and agriculture
Mehmood Halepoto’s family has lived in this village for centuries. Like other residents, Halepoto is a herder who ploughs the fields when it rains. In 1990, officials came looking for coal and found huge deposits under the village.
The Thar desert in Sindh province contains 175 billion tonnes of lignite coal – one of the largest untapped coal deposits in the world. It is also one of the most populated deserts in the world – home to world heritages sites and endangered species.
Most of the 1.6 million people who live in the Thar desert region live in poverty and are highly vulnerable to extreme weather events. About 25% of the people live within the proposed coal development area. They thought they would benefit, but that has not been the case.
“We were happy, as people told us we would be rich, but now, this has turned into a nightmare and the black gold has become a black snake that is displacing us from our ancestral land,” he told thethirdpole.net.
Play
It was only in 2015 that work began on the fields, when the Thar coal project was included as part of a string of energy and infrastructure deals signed under the $ 46 billion China-Pakistan Economic Corridor. These agreements included eight coal-fired power plants and a 3,000-km network of roads, railways and pipelines to transport oil and gas from Gwadar Port on the Arabian sea to Kashgar, in the northwestern Chinese province of Xinjiang.
In December 2015, China approved a $1.2 billion investment for surface mining of Thar coal and the establishment of 660 megawatt power projects. The deposits are divided into 12 blocks, each containing two billion tonnes of coal.
In the first phase, the Sindh provincial government has allocated block II to Sindh Engro Coal Mining Company to excavate 1.57 billion tonnes of coal and build a 660 MW power plant. The plant is expected to send power to the Pakistani national grid by June 2019 and will later be expanded to produce 1,320 MW of power.
A state-owned Chinese company, the China Machinery Engineering Corporation, is providing the machinery and technical support for the excavation of coal, and building and running the power plant. The local company will provide human resources, management and be responsible for the distribution of power. Sindh Engro Coal Mining Company said the project has created 200 technical jobs and 1,600 menial positions. But locals have been protesting that the company has not even given them the menial jobs. Around 300 Chinese, including engineers, miners and experts, are also working on the site.
Local fears
The Chinese team has started excavating the first pit. In the first phase, Sindh Engro Coal Mining Company will relocate five villages, which are located in block II, including Thario Halepoto village.
Sindh Engro Coal Mining Company has started paying villagers for their homes and agricultural land. Its chief executive officer, Shamsuddin Ahmed Shaikh, claims his company will do all they can to help the villagers.
“We will construct model towns with all basic facilities including schools, healthcare, drinking water and filter plants and also allocate land for livestock grazing,” he told thethirdpole.net
He said that the company is paying villagers above market prices for their land – Pakistani Rupee 1,85,000 ($1,900) per acre. However locals say this price does not take into account its high environmental value and they do not want to be relocated to the new towns, the exact location of which is yet to be decided.
“We [our families] lived in this village for centuries, we spent our childhood here and our forefathers are buried here; to leave all this is very difficult,” said Muhammad Hassan Halepoto, a resident of the Thario Halepoto.
“We have dozens of trees on each acre of land," said one villager. "We feed our livestock from these trees even during droughts and also when it rains we plough our lands and get a huge amount from the crops. These lands are our permanent source of livelihood."
The villagers will also lose grazing lands to the coal project. The Thar Desert is home to seven million cows, goats, sheep and camel and provides more than 60% of the milk, meat and leather requirement of Sindh province.
Villagers fear that the project will be an environmental disaster for the desert. The company will cut thousands of indigenous trees to make way for the mining and construction of roads, destroying the local ecology.
A Sindh Engro Coal Mining Company official said that the company will plant 10 trees for every tree cut. So far the company has planted 12,000 trees in an 18-acre area called the Green Park and more will be planted in next two years.
But villagers said they had been using the leaves of these trees as fodder for their animals and they will have no access to the trees in the park. Also instead of planting indigenous trees, they pointed out, the company is planting alien species like conocarpus, a-fast growing type of coastal plant that sucks up a lot of water and will be disastrous for the desert environment.
Locals are afraid that the company will extract huge amounts of groundwater for coal excavation, a region where groundwater level is dropping in some areas by two metres a year and has fallen to 100 metres deep in some place due to prolonged drought. Drought in the desert has led to the death of more than 3,000 children in the past three years, although authorities have admitted only 828 deaths.
Residents of another nearby village Gorano have filed a constitution petition in the court against the mining company. Leela Ram, one of petitioners, said that the mining company will dump wastewater over 2,700 acres of cultivatable land and forest. “This will directly affect 15 major villages with 15,000 people, 2,00,000 trees will die and all these people will have to migrate from their native villages,” said Leela Ram.
Shaikh rejected such claims saying his company would only use 1,400 acres for two reservoirs to store the water extracted during excavation. “It will be natural underground saline water, not toxic or poisonous in any way and it will not affect any village,” he claimed.
Bucking global trends
Thar coal deposits are lignite, a particularly dirty kind of coal with low energy content. This means a higher quantity of coal needs to be burnt to produce power, which means more carbon emissions.
Many countries around the world are reducing power generation from dirty lignite. China itself is closing down many coal based power plants at home, but on other hand it is helping developing countries like Pakistan to mine lignite coal and build new power stations.
At the UN climate summit in Paris, Pakistan pledged to reduce its green-house gas emissions by 5%, but at the same time it plans to develop its fledgling coal industry with five new power plants scheduled to start producing electricity by 2018 and many more in the pipeline.
A seven-year-old girl recently filed a case in Pakistan’s Supreme Court, with the support of her environmental-lawyer father, claiming government plans in the Thar desert will exacerbate climate change and deprive future generations of the right to healthy life. In her case she points to the needs to invest in renewables to overcome the power shortage, rather than dirty coal, since the country is endowed with plenty of sun and wind.
Shaikh admitted that lignite is worst form the coal, but he claimed that his company will be using state-of-the-art modern technology to collect the fly ash from the coal chimney and dump it in a site that the company will build in the future, thus minimising the damage from fly ash. His words may be little comfort to the villagers of the Thar desert and the next generation of children growing up in Pakistan today.
Warm Regards
Anurag Singal
Sr. Manager-Business Development
EMIL, Aditya Birla Group
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