Sanjeev Aggarwal

Amplus Infrastructure Developers Private Limited

Clearances and Land Acquisition for Coal Blocks

Way Forward to Meet Demand of Coal

2

India’s peak power demand in 2017 is expected to be ~199GW

2

…and Installed Capacity requirement to ~266 GW by 2017

Projected Power demand and Installed capacity requirement

Source: CEA, 17th EPS, IEP, Planning Commission, KPMG Analysis

91 96 102109

117126

135145

121130

141151

162174

186199

162174

189202

217233

249266

0

50

100

150

200

250

300

2010 2011 2012 2013 2014 2015 2016 2017

GW

Base Demand Peak Demand Installed Capacity Requirement

3

Of this, ~83 GW is expected to come from Thermal power plants and Coal is likely to be the dominant fuel source

3

Linkage, 41 GW, 59%

Captive, 13 GW,

19%

Imported, 16 GW, 22%

0

5

10

15

20

25

30

35

2010 2011 2012 2013 2014 2015 2016 2017

GW

Coal Gas Diesel Nuclear Hydro RES Lignite

• Maximum addition is likely to be in Thermal power plants (~83 GW)

• Coal is the dominant source of Fuel (~70 GW)

Coal power plants by source of Coal

Capacity addition by fuel type

• Most of the planned coal

plants use domestic

source (Linkage or

Captive); 22% of the capacity

addition is based on

Imported coal

• 70 GW capacity of Coal based power plants to be added by 2017

Capacity of Coal based power plants

Source: CEA, Infraline, MoP, KPMG Analysis

77 79 8599

117 124137

146 147

0

20

40

60

80

100

120

140

160

2009 2010 2011 2012 2013 2014 2015 2016 2017

GW

0

2

4

6

8

10

12

14

16

18

20

2010 2011 2012 2013 2014 2015 2016 2017

GW

Linkage Captive Imported

The significant linkage between power and coal

Coal to remain as the mainstay of Indian power capacity addition

Given the price difference between Indian and imported coal, huge demand

for Indian coal

Coal India falling majorly short of meeting the demand and pressure

mounting on the coal companies to increase supply (by reducing e-auction,

pit-head stocks, etc.)

Why is that coal companies are unable to meet the demands of its

customers?

The significant linkage between power and coal

Development of the coal blocks has become a challenge both for the

economy as well as for the industry.

Though available in plenty below the ground, is not available to meet the

requirements of the growing economy leading to tremendous loss.

The issues that have really pushed back the efforts are land acquisition and

various clearances. And the issue is common for Coal India and the captive

mining companies.

Land Acquisition

Even after award of the mining license, the land acquisition process

remains a big challenge

Revenue land (non-forest)

Private land

Forest land

Issues range from private land prices, rehabilitation, rights of forest

dwellers and so on…

The government need to enforce its Eminent Domain right at least for the

land that holds natural resource and complete the acquisition process in a

timely manner

7

Environment and Forest Clearance

Recent issue of forest clearances: Category A / B is the biggest bugbear for most

of the coal mine owners:

Huge investments incurred / planned based on government allocation of coal mine.

Discussion at the top levels in the GoI over last 2 ½ Years; still uncertain on what can

be cleared

Now, we believe that GoM has finally decided to do away with the Go/ No-Go policy

Any change of policy retrospectively or uncertainty in the same is the single largest

measure that impacts investments in a growth economy.

Latest policy of MoEF to not grant environmental clearance till the forest

clearance is obtained will further add on to the timelines

How can we do it better?

Forest clearances: With the curtain drawing on the Go/ No-Go issue, we

expect hat the forest clearance will be much more timely and systematic

Avoid linking of environmental clearance with forest clearance

The new land acquisition bills/ rules can provide for compulsory land

acquisition for areas bearing natural resources

Provide PL immediately to all pending applicants along with the permission

to prospect in forest areas – prospecting need not involve any forest loss.

Increasing the production for the future..

Coal Block allocation through competitive bidding is the next step:

Avoid the issues of environment and forest clearance by pre-screening the

blocks

Increase coal production through involvement of real mining companies and

avoid squatters that may hold on the resource

Avoid speculation by providing as much data as possible

Up-front premium just increase the speculation premium rather than bringing in

real efficiencies

The long expected coal regulatory system can take care of the concerns

about excessive profiteering by the mining companies

Result: The coal will be available in plenty, to all the needy, and at the

right cost.

Thank you