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Coal Mining : Forest Clearance : Go-And-No-Go-Area, Shri R V Shahi, Former Secretary, Ministry of Power

In the last few weeks, the issue regarding forest clearance for coal mining projects has been under debate. The matter is assuming significant proportion because of the Coal Ministry objecting to the way Ministry of Environment and Forest has unilaterally declared a large number of coal mining areas as "No-Go-Area", which means coal mining development cannot be undertaken in these blocks. What has triggered the high pitch of controversy is the excessive proportion of such banned coal blocks. It is reported that almost 48% of coal blocks, in the opinion of the Ministry of Environment and Forest, cannot be taken up for development of coal mines. This is indeed a matter of serious concern and, therefore, it has rightly been taken up by the Ministry of Coal with the Prime Minister's office.

It does not need to be over emphasized that India's natural energy resource is primarily coal. So far as petroleum fuels are concerned, we are not only heavily dependant, but in fact dependant to the extent of over 80%, on import. Quantities of imported petroleum fuels have been increasing just as proportions have also been increasing, and the problem gets compounded because prices of petroleum fuel increase steeply and erratically. Management of Petroleum Energy has, therefore, been a great challenge, not only for the corporate which deal with this sector but also for the Government in view of the excessively high financial burdens it creates on the Government budgetary system. We have not been able to effectively and satisfactorily feed even 10% of the gas based power generation capacities. In the long run it is unlikely that this proportion of gas based generation of electricity will go beyond 10%.

Though in terms of installed capacity, coal based power generation is less than 60%, in terms of electricity generation, these plants contribute more than 70% of power. This is so because the other sources of power generation viz. hydroelectric, wind etc. have significantly lower capacity utilization (Plant Load Factor). Development of hydroelectric projects, whose potential is estimated at 150 GW has its own problems and challenges posed by geological surprises and other constructional difficulties. Besides, even in these projects the Ministry of Environment and Forest has similar views on account of the regulatory requirement of forest clearance, and this further impedes the process of developing these projects.

Integrated Energy Policy (2006), which was prepared after almost two years of work and wide consultation across the country, is the most authentic reference document on the subject of energy perspective and planning for next 25 years. This document recognizes, that in spite of enhancing the proportion of nuclear power from the present less than 3% to over 7% in the next 25 years, exploiting fully the hydro potential of 150 GW, developing the entire wind potential of 50 GW and maintaining the present level of gas based generation at 10%, the dominance of coal as the main energy source for power generation, and also for other energy needs, will continue. This scenario predicts the shape and profile of energy sector, including power, in the year 2032, when the power capacity is projected to rise beyond 800 GW.

The need for development of domestic coal mines has to be viewed under the above perspective. The Integrated Energy Policy duly recognized that the entire need of coal cannot be met only through domestic coal production. We will need to supplement the domestic supply with substantial amount of import. Even though India is endowed with huge coal reserves (estimates keep varying from time to time), in our energy strategy, it is clearly appreciated that these reserves should be so developed and consumed that they are available for a longer period of time for our future generations. It is precisely for this reason that when the Ministry of Power planned for Ultra Mega Projects, the approach consisted of both pit-head power station to use domestic coal at coal mines and coastal power stations primarily to use imported coal. Keeping in view the overall energy security aspect in mind, and also the sustainability of cost, it cannot be argued that imported coal will constitute a very large proportion of overall coal required. The economy is already suffering, as pointed out earlier, on account of disproportionate import vis-?-vis domestic production of oil.

The present stance of the Ministry of Environment and Forest has to be evaluated keeping these large issues of energy essentially contributing towards growth, self reliance to provide better degree of energy security and also the cost from the point of view of affordability, of course, not disregarding the environmental concerns. I recall, it was the suggestion of the Ministry of Power way back in 2005, that in order to streamline and expedite the process of environment and forest clearance, more particularly forest, it would be desirable that, once for all, Ministry of Environment and Forest mapped the entire country and identify a few extremely sensitive areas well in time with the advice that project developers both in coal and hydropower need not even consider such sites. The objective was to identify such exceptionally sensitive areas. It was not to carryout the identification in the manner in which the Ministry seems to have done and disqualified such a large number of coal blocks constituting over 45% of the total.

In the last few months, there have been a number of policy statements from the Ministry of Environment and Forest, which may discourage project developers, equity providers and lenders. As it is, environment and forest clearance has been a very lengthy process. All developers have experienced enormous difficulties in the past. One of the most important reasons for the Coal India subsidiary companies not being able to step-up the coal production capacity has been the inordinate delays in securing environment and forest clearance. The recent statements make things even worse. I recall, in 2005 the Ministry of Power had settled with the Ministry of Environment and Forest that coal linkage would not be made a pre-condition in processing environment clearance proposals. Both these requirements - coal linkage and environment clearance could proceed parallely, so that they could converge at the stage of securing financial closures. In last few months, for reasons unknown, the MOEF and Expert Committee have been insisting that they would not entertain the proposal unless coal linkage is provided. Obviously this is going to create enormous delays. Another statement from MOEF that it could review the clearances already accorded, even for projects which are already under construction, could lead to such an uncertainty that not only developers but even lenders in the future would find it difficult to agree to lend for such projects. Both these policy statements were avoidable. MOEF needs to appreciate that, after a lot of struggle, which involved a number of legislative and policy initiatives, and very hard and serious administrative actions, power sector has been able to attract developers and financiers. The Agenda of the Government to have 9-10% growth, over next 25 years, cannot be met if power sector is not allowed to have a commensurate growth in generation capacity. And, in spite of a reasonable dependence on fuels from outside, most of the support for providing fuel to the power plants will have to be produced domestically. The present approach of the MOEF vis-?-vis hydroelectric projects and coal projects would make it virtually impossible to plan and implement power capacity additions, commensurate with targets for economic growth. Either economic growth targets will have to be scaled down or MOEF will need to revisit its approach.

The approach of declaring the "No Go" zone is not only affecting the power sector, but it is also going to affect other important sectors like steel and mines. India's growth story will depend on all these important sectors as well. Impediments caused on the ground of forest clearance could definitely be reduced considerably through imaginative methods for mitigating the environmental concerns. Several years ago a proposal was mooted to the MOEF that an SPV could be created to develop forests in different areas by suitably utilizing the fund created by deposits from project developers as compensatory afforestation fund. In the last couple of decades huge sums of money have been deposited both by power and coal sectors. An analysis of deployment of this fund would render revealing conclusions. Over dependence of MOEF on State forest machinery, it is widely known, has not been effective and has not delivered the desired outcome. Here again, I recall, in spite of several reminders from Power Ministry, this great initiative, which could have been responsible for creating more than double of afforestation as compared to what is destroyed, could not take-off in any meaningful manner.

As a concept "Go-And-No-Go" is a good approach. It would provide a good degree of certainty to developers not to touch any such area which is banned. But, it must be appreciated that its success will depend entirely upon how judicious and credible this approach is in terms of declaration of such extremely sensitive zones. On the face of it, declaring almost 45% of the area as "No-Go-Area" lacks credibility, besides this being a highly impractical proposition.