7th Five Year Plan (Vol-2)
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ENERGY

INTRODUCTION

6.1 Energy is an essential input for economic development and for improving the quality of life. India's per capita consumption of commercial energy (viz., coal, petroleum and electricity) is only one-eight of the world average and will increase with the growth in GDP and improvement in the standard of living of the people. The energy strategy has to plant not only for an increase in indigenous availability of energy but also its better utilisation because the trends in India's commercial energy consumption show high rates of growth relative to GDP growth and the growing share of oil. The annual growth rates of commercial energy consumption in certain sub-periods were as follows:

   %
1953-54 to 1970-71 7.2
1970-71 to 1979-80
1979-80 to 1984-85 5.9

 years, it could become adverse with declining production from non-OPEC oil-producing countries. Since we are unlikely to be self-sufficient in oil in the near future, an intolerable burden by way of cost of oil imports will be cast on the economy should oil prices again rise as they did in the seventies and early eighties.

6.2 There was a fall in the rate of growth after the first oil crisis but not after the second one. With regard to the mix between different types of commercial energy, the Working Group on Energy Policy had suggested in 1979 that the mix in 1982-83 should be 24.9 per cent of coal, 42.1 per cent oil and 33 per cent electricity. In fact the shares for the same year were 21.6 per cent for coal, 49 per cent for oil and 29.4 per cent for electricity. The dependence on oil appears to have increased in the last three years of the Sixth Plan. Though the international oil situation is comfortable now and may continue to be so for several years, it could become adverse with declining production from non-OPEC oil-producing countries. Since we are unlikely to be self-sufficient in oil imports will be cast on the economy should oil prices again rise as they did in the seventies and early eighties.

6.3 The sectoral pattern of consumption of commercial energy is given in Table 6.1.

6.4 The data bring out the rapid rise in the share of agriculture in commercial energy consumption during the sixties and seventies and the dominant role of industrial consumers in electricity and coal and of the transport and household sectors in oil consumption. A major policy objective is to increase the use of coal in households and of electricity in the transport sector in order to reduce their dependence on oil.

TABLE 6.1
Sectoral Shapes in Commercial Energy Consumption
(in per cent)

    Commercial Energy Specific fuels in 1984-85
  60-61 79-80 84-85 Oil Electricity Coal
Household 20.6 15.7 18.2 29 11 3
Agriculture 3.6 9.4 9.8 10 16
Industry 39.2 38.2 36.4 5 62 78
Transport 33.8 32.8 31.4 56 2 13
Others 2.8 3.9 4.2 9 6
  100.0 100.0 100.0 100 100 100

6.5 Commercial energy accounts for a little over half of the total enery used in the the country, the rest coming from non-commercial resources like cowdung fuelwood and agricultural waste. Though the share of these noncommercial sources has been coming down, in absolute terms, consumption has increased from around 126 million tonnes of coal replacement (MTCR) in 1953 to 250 MTCR in 1980. These renewable, non-commercial sources have been used extensively for hundreds of years but in a primitive and inefficient way. The indiscriminate use of non-commercial energy sources is leading to an energy crisis in the rural areas. This needs to be tackled with a sense of urgency. We must also bring about the development and accelerated utilisation of renewable energy sources (both in the rural and urban areas) wherever these are found to be technically feasible and ecnomically viable. The Seventh Plan reflects this directional emphasis.

Energy Resources

6.6 Coal and lignite: The present assessment of available resources of coal is given in Table 6.2. potential, 49.67 Twh has already been developed and 26.96 Twh is under development. More than 80 per cent of the hydro potential still remains unharnessed despite the inherent advantages of hydro-electric power plants over thermal and nuclear plants. However, many such terrains may not be available from larger environmental and geological considerations and a realistic picture of hydro potential is necessary.

6.11 Oil and Gas: As on 1-1-1980 the balance of net recoverable reserves of oil (gross reserves less produc-

TABLE 6.2
Resources of Coal
(Million tonnes)

     Seam Characteristics Proved Indicated Inferred Total
1. 1200m 34,413 58,996 55,382 148,791
2. Thickness 1.2m or more depth upto 600m 35,826 42,557 28,474 106,857

Source: Row 1: Geological Survey of India estimates, September, 1984. Row 2: Bureau of Industrial Costs and Prices.

6.7 There has been a substantial increase in coal resources since the start of the Sixth Plan, accounted for largely by two fields of the Mahanadi Valley, namely, Talcher and Ib river.

6.8 About 90 per cent of total lignite reserves in the country are at Neyveli in South Arcot district of Tamil Nandu. The total reserves are placed at 3,300 million tonnes of which 1,900 million tonnes are in the proved category. The other lignite-bearing States are Gujarat, Rajasthan and Jammu and Kashmir where reserves of the order of 565 million tonnes have been indicated or inferred.

6.9 Though India ranks fifth in the production of coal in the world, it has reserves of 201 tonnes of coal per person as compared to 13,747 tonnes in the USA, 23,112 tonnes in USSR and 1060 tonnes in China. The known reserves of coal in India constitute only 0.8 per cent of the total world coal resources. While the total estimated resources of coal in India are 1,48,791 million tonnes the mineable reserves may amount to about 60,000 million tonnes. Based on the demand projections upto the turn of the century and assuming an annual growth of 4 per cent in coal consumption thereafter these resources would be sufficient for about 130 years. The position for metallurgical coal is not satisfactory and the probable life expectancy is around 70 to 80 years only.

6.10 Hydro electric: The Central Electricity Authority has recently completed a systematic reassessment of hydro-electric resources of the country. The estimated annual energy potential is placed at 472.15 Twh (billion Kwh units) (89,830 MW at 60 per cent load factor). of this tion) were placed at about 360 million tonnes and gas (free and associated) at about 352 billion cu. meters. As a result of intensification in exploratory efforts and reassessment of reserves of various fields, the balance of net recoverable reserves of oil has increased to 511 million tonnes as on 1-1-1984. Similarly in case of gas (free and associated), the balance of net recoverable reserves has increased to 478 billion cu. meters. Almost 67 per cent of the increase in gas is on account of free gas discoveries in the west coast offshore.

6.11 Oil and Gas: As on 1-1-1980 the balance of net recoverable reserves of oil (gross reserves less production) were placed at about 360 million tones and gas (free and associated) at about billion cu. meters. As a result of intensification in exploratory efforts and reassessment of reserves of various fields, the balance of net recoverable reserves of oil has increased to 511 million tonnes as on 1-1-1984. Similarly in case of gas (free and associated), the balance of net recoverable reserves has increased to 478 billion cu. meters. Almost 67 per cent of the increase in gas is on account of free gas discoveries in the west coast offshore.

6.12 The prognosticated geological resources of hydrocarbons are estimated at about 17 billion tonnes of which 63 per cent are expected to be offshore and 37 per cent onland. Out of this, the geological reserves established are only 4 billion tonnes. Further, half of the prognosticated resources are estimated to be in the form of natural gas of which only 10 per cent have been established. Accordingly future planning has to take into account the possibility of significant finds in gas reserves. A policy plan for utilisation of the gas reserves has to be evolved in advance.

6.13 In 1983 our proved reserves of oil represented only 0.5 per cent of the world oil proved reserves. As regards gas, the proportion of India's reserves to the world gas reserves was also 0.5 per cent. At the current rates of consumption, oil can last about 15-20 years.

6.14 Uranium: The uranium resources in the country are estimated to be about 70,000 tonnes, the thermal reactor equivalent of about 1,900 million tonnes of coal. This resource alone will be equivalent to 120 billion tonnes of coal if used in breeder reactors. The long range potential of nuclear energy in India depends on thorium whose reserves exceed 3,60,000 tonnes. When used in breeder reactors, this resource would be equivalent to 600 billion tonnes of coal which is about five times the coal reserves of India. Thus thorium can be viewed as the single most important energy resource in the long term.

Renewable Engergy Resources

6.15 Fuel wood: India has a total forest area of about 75 million hectares which forms about 22.8 per cent of the total geographical area. The total availability of fuel wood according to the Report of the Fuel Wood Committee (1982) is at present about 50 million tonnes, which the Committee has estimated would only meet less than half of the actual requirements. Thus the Committee has concluded that if the present trend continues, the fuel wood for cooking will become the greater constraint than the availability of food itself.

6.16 Agricultural wastes: The availability of agricultural wastes depends on the extent of area and production of different crops. Very few reliable studies on agricultural waste estimates are presently available. Based on the available estimates and considering the fact that there are several competing uses for agricultural wastes like feed and fodder, roofing material and organic matter for compost-making, the consumption of agricultural wastes for fuel purpose in 1975-76 was estimated to be around 41 million tonnes.

6.17 Animal dung: Animal dung forms 15 per cent of the total energy consumption in the rural sector. Out of total estimated production of 324 million tonnes of animal dung (air-dry), about 73 million tonnes have been estimated to be burnt for energy purposes which is more than the total fertiliser consumed in agricultural production in India. If this animal dung was used as fertiliser, food production could have been augmented substantially.

6.18 Others: Solar energy potential is almost unlimited in tropical countries like ours. However, a major constraint in harnessing this source of energy is the high costs of existing technologies. These costs have to be brought down through intensive and applied R and D. Wind energy is available in abundance, especially in coastal areas and in hilly regions, but cost effective technologies have to be developed to harness this energy.

Energy Conservation

6.19 According to the Report of an Inter-Ministerial Working Group on utilisation and conservation of energy, there is a conservation potential of 25 per cent in the industrial sector. In the transport and agricultural sectors the conservation potential is 20 per cent and 30 per cent respectively. The report has further quantified conservation potential that could be achieved by short-term, medium term and long term measures and the investments necessary by the industry to achieve this potential. So far, we have not been able to make significant progress in energy conservation.

6.20 Preliminary estimates indicate that the oil intensity of Indian economy has been increasing, contrary to world trend. The potential oil savings are 1.0 million tonne in the industrial sector, 2.4 million tonnes in the transport sector and 0.5 million tonne in the agricultural sector.

6.21 Eighty per cent of electricity is consumed in energy-intensive industries, such as aluminium, iron and steel, textiles, chemicals, fertilisers, cement, paper and collieries. The consumption of electricity per unit of product in the above industries is much higher than that in developed countries. Part of it reflects the vintage of the production process. However, savings are possible to the extent of 5250 MW in the industrial sector and 1870 MW in the agricultural sector. In the latter, 80 per cent of the pumpsets work at efficiency of 30 per cent or lower. With a little investment their efficiency can be increased by about 15 per cent to 20 per cent. Transmission and distribution losses are about 21 per cent whereas these are of the order of 6 per cent to 12 per cent in the developed countries. If the losses can be reduced by 5 per cent, this will amount to saving in additional capacity of about 1500 MW. There is also room for reduction in the auxiliary consumption in the thermal power stations.

6.22 It is estimated that about 8 million tonnes of coal are wasted in India every year through wrong practices in storage, handling, preparation and combustion of coal. Little attention has been paid to these aspects so far.

6.23 A decision has been taken recently by the Government to set up an Energy Conservation Fund. The proceeds of this fund would be utilised for carrying out conservation measures through studies, training, education and providing assistance in the implementation of different schemes. Strong administrative structures will also be created for expediting decisions.

6.24 A beginning in instituting energy audit in the units consuming considerable quantities of energy will be made. If required, targets will be fixed for achieving efficiency standards on a time-bound basis and incentives provided for units which meet these standards.

Productivity

6.25 OH: It can be said that in the oil sector, productivity levels are generally satisfactory. However, there is still scope for improving the utilisation of the onland and offshore drilling rigs. With the use of computers, considerable increase in productivity of such equipment has been achieved in other countries. Adoption of the systems approach could perhaps result in economising the use of support equipments for rigs. Inventory controls need to be streamlined. The working of the workshops should be on commercial lines. The quality of wells drilled needs to be improved. Use of micro-processor-based systems can optimise refinery operations. Fuel and loss, constituting the largest of the elements that make up refinery operating costs, should be reduced. In the absence of any domestic competition, the industry should constantly measure its performance with that of international oil firms.

6.26 Coal: In the coal sector, despite the adoption of costly equipment of international standards for open-cast mining, the output per man shift (OMS) is consideably below the international levels. Even between the coal companies, there is considerable variation. The OMS of the underground mines has been virtually stagnant. The equipment utilisation factor leaves much scope for improvement. The quality of the feasibility reports needs to be improved without which there can be costly failures in project implementation.

6.27 Power: As regards the power sector, poor capacity utilisation of the thermal plants vitiates the working of most utilities. There are also time and cost over-runs in implementing projects. The stabilisation period tends to get elongated when Stations are handled by inadequately trained personnel. The transmission and distribution facilities have not increased to the extent of additions to the installed capacities. Excessive manpower, swollen inventories, high oil and coal consumption and heavy arrears are indicative of poor management practices in the State Electricity Boards.

6.28 In conclusion, one of the key elements of the energy strategy is to increase the productive efficiency of capacities already created and of the equipment used.

Public Awareness

6.29 As yet people are not sufficiently aware of the energy situation in the country. No energy startegy can be successfully implemented without better understanding of the energy situation among the public. Consciousness can also be increased through the publication of analytical work and through the promotion of wide-ranging public debates.

Equitable Distribution

6.30 Urban areas use around 80 per cent of commercial energy though their share in population is about 24 per cent. Though 64 per cent of villages are electrified, only around 8 per cent of rural households are using electricity. Rural areas suffer from poor availability of commercial sources as also inefficiency in the use of non-commercial sources. In order to correct this, micro-level or decentralised energy planning is necessary. This is being attempted in the Integrated Rural Energy Programmes (IREP) which was pilot tested in the Sixth Plan and is now being extended to all States and UTs. Details of this programme are given in the chapter on Rural Development.

Energy Pricing

6.31 The Sixth Plan had emphasised the need to give high priority to the evolution of a structure of energy prices which reflect true costs, curb excessive engergy use and promote conservation of scarce fuels. Except in the case of oil, timely adjustments have not been made in the prices of coal and electricity to reflect the real costs. Energy pricing has not promoted, to the desired extent, inter-fuel substitution. Energy users have generally not adopted conservation measures already identified. While action is being taken to promote technologically energy-efficient equipment and processes, on the one hand, appropriate energy pricing policy would have to be followed, on the other hand, in order to induce economies in the use of energy in all sectors and encourage desired froms of inter-fuel substitution, including renewable energy wherever viable. The pricing of energy should not only reflect the true costs to the economy but also help to ensure the financial viability of the energy industries. This is particularly relevant in respect of coal and power industry. As we have said in the past, it is wrong to think that an adjustment in the prices of a basic input like energy would aggrevate the inflationary situation; the costs to the economy are not reduced by not reflecting them in proper pricing. Indeed the continuance of wrong pricing policy has a far more deleterious effect on the health of the economy than is often realised. The formulation of an integrated energy pricing structure on the above lines should receive the highest priority in the beginning of the Plan period.

Strategy

6.32 In the light of the above, the existing energy strategy needs to be modified for the Seventh Plan with the following main elements:

  1. accelerated exploitation of coal, hydro and nuclear power;
  2. intensification of exploration for oil and gas, and exploitation of oil with regard to the available recoverable reserves and reasonable expectations of adding to them in the foreseeable future;
  3. advance policy planning for the large emerging gas potential;
  4. management of oil demand including formulation of a national transport fuel policy;
  5. energy conservation including inter-fuel substitution;
  6. increasing the productive efficiency of capacities already created and of equipment used;
  7. exploitation of renewable sources of energy like energy forestry, bio-gas, biomass, wind, solar energy, etc.especially to meet the energy requirements of rural communities;
  8. intensification of research and development in all energy resources and in particular, in emerging energy technologies;
  9. design and implementation of area-based integrated rural energy programmes; and
  10. wide public explanation,discussion and acceptance of energy strategy to ensure its successful implementation.

6.33 In the subsequent paragraphs, the plan policies and programmes of-oil, coal, power and new renewable sources are discussed.

OIL AND GAS

6.34 Domestic production of crude oil and natural gas increased nearly threefold during the Sixth Plan, as shown in Table 6.3.

TABLE 6.3
Oil and Gas Production in the Sixth Plan

    1979-80 1984-85
A. Oil (million tonnes)      
1. Offshore 4.42 20.14
2. Onshore 7.35 8.85
Total 11.77 28.99
B. Gas (billion cu.metres)     
1. Offshore 0.54 4.40
2. Onshore 2.22 2.83
Total  2.76  7.23 

 Unfortunately, because of either lack of consumers onshore or the absence of compression and dehydration facilities offshore, 43 per cent of offshore gas had to be flared in 1984-85. The flaring is expected to be largely eliminated by 1986-87. The flaring of onshore gas was more in the north-eastern region.

6.35 The important lessons learnt while implementing the Sixth Five Year Plan are:

  1. The individual discoveries and finds made were, in general, small, suggesting that a similar pattern could prevail in the Seventh Plan as well. Hence the need for intensifying exploration as well as for extending exploratory activities to inadequately explored and unexplored basins.
  2. Results obtained during drilling indicate the need for more meticulous planning and preparation for drilling in those areas, where, due to either greater depths or abnormal conditions, high pressures and temperatures may be encountered. Since future exploration would involve deeper drilling as well as drilling in such abnormal areas, it is expected to be both costlier and time consuming.
  3. With encouraging results obtained from water-injection technology, its application to other areas is desirable. If not, effective application of other suitable enhanced 'oil recovery (EOR) techniques would be required.

6.36 These factors have been taken into account in formulating the strategy for the oil industry in the Seventh Plan.

Seventh Plan:

Crude Oil and Natural Gas

6.37 Exploration: The total area of sedimentary basins is of the order of 1,720,000 sq.kms. of which the offshore sedimentary area upto 200m depth amounts to 3,20,000 sq.kms. This area is divided into 26 sedimentary basins of which 13 are of immediate interest and have been taken up for hydrocarbon exploration. These 13 basins can be divided into three categories as follows:

Category I

Petroliferous basins with proved commercial production, e.g. Cambay basin, Upper Assam Shelf, and Bombay off-shore basin.

Category II

Basins with known occurrence of hydrocarbons, but where no commercial production has yet been obtained, e.g. Rajasthan, Cauvery, Krishna-Godavari, Andaman, Bengal, Himalayan Foothills and Ganga Valley and Tripura-Nagaland fold belt.

Category III

Basins in which significant shows of hydrocarbons have not yet been found. However, on general geological grounds these basins are considered to be prospective, e.g., Kutch-Saurashtra, Kerala-Konkan and Mahanadi.

6.38 A few other sedimentary basins may be prospective on the basis of analogy with similar hydro-carbon-producing basins in the world. These basins (Category IV) are Gondwana basin, the Vindhyan basin and Deccan Syneclise.

6.39 As stated earlier, the prognosticated resources of hydrocarbons are about 17 billion tonnes of which 63 per cent are offshore and 37 per cent onshore. 60 per cent of prognosticated resources are in Category I, 30 per cent are in Category-ll and 10 per cent are in Category-lll. Out of these, the established geological reserves of hydrocarbons (upto 1-1-1984) are 4 billion tonnes, the distribution of which is 99.2 per cent in Category-l, 0.8 per cent in

     ONGC OIL
1. Geological and gravi-magnetic survey (party years) 107 5
2. Onland seismic surveys (party years) 284 38
3. Offshore seismic surveys (thousand line kms) 140 17
4. Onland exploratory drilling (thousand metres) 1703 346
5. Offshore exploratory drilling (thousand metres) 710 62

Category-II and nothing in Category-Ill. About half of the theoretical hydrocarbon reserves are in the-form of natural gas and only 10 per cent of these could be established so far. The gas discoveries therefore hold great promise for the future.

6.40 Most of the exploratory activities upto early 1960s were concentrated in Cambay basin and Upper Assam Shelf. The token efforts made in other basins resulted in the discovery of some small gas pools in isolated reservoirs of Tripura, Rajasthan and Jwalamukhi area of Himachal Pradesh. Remarkable success was achieved in the early seventies in the offshore leading to discovery of a number of large and small oil and gas fields including the well known big Bombay High oil field and Bassein gas field. The exploration programme of the late 1970s and early 1980s yielded some success in finding oil and gas in the Andaman, Krishna-Godavari and Cauvery basins.

6.41 The experience of exploration in the recent past has shown that additional reserves of oil in Category-l basins would be in the subtle structural and stratigraphic traps and individual accumulations may be small in the majority of cases.

6.42 While in the Sixth Plan the exploratory metreage drilled in the onland basins of Category-ll and Category-Ill taken together was around 24 per cent of the total exploratory effort, in the Seventh Plan as much emphasis would be given to these basins as to the Category-l basins. Though high-risk, Category-ll and Category-Ill basins could also be high-reward areas. Besides, these areas need long lead time for establishing production potential and production facilities prior to commercial exploitation. Unless adequate action is taken now in establishing the hydrocarbon potential of Category-11 and Category-111 basins during the Seventh Plan period, it would be impossible to sustain the existing level of production during the subsequent Plan periods. In planning the exploratory metreage for the different basins, it may be necessary to alter the inter-se priority depending upon the feedback from continuous monitoring of the exploratory drilling. Important targets for exploration are given in Table 6.4.

TABLE 6.4
Targets for Exploration Activity in the Seventh Plan

ONGC Oil
1. Geological and gravi-magnetic survey (party years)

107

5

2. Onland seismic surveys (party years) 284 38
3. offshore seismic surveys (thousand line kms) 140 17
4. Onland exploratory driling (thousandmetres) 1703 346
5. Offshore exploratory drilling (thousand metres) 710 62

6.43 The total exploratory metreage of 2821 thousand metres planned for the Seventh Plan, involves a step up of 192 per cent on the Sixth Plan achievement of 963 thousand metres and as a result it is expected to add 956 million tonnes of geological reserves of oil (gross recoverable reserves 235 million tonnes) and 497 billion cu. metres of geological reserves of gas (gross recoverable reserves 331 billion cu. metres).

6.44 In view of the need to step up considerably exploration activity and extending it to new areas having logistical and technical problems, it may be advantageous to attract some foreign oil companies. Their contribution to the total exploration effort may be marginal but they could bring in new technology and practices. It is, therefore, necessary to study the current terms and conditions on which they are being contracted to explore in other countries and then decide a contracting strategy for foreign firms.

6.45 Development and production: The crude oil and gas production from onland and offshore areas of ONGC and OIL is given in Annexures 6.1 and 6.2. It can be seen that domestic oil production would increase from 30.14 million tonnes in 1985-86 to 34.53 million tonnes by the terminal year of the Seventh Plan.

6.46 ONGC would be stepping up crude oil production from Cambay and Upper Assam and Nagaland areas. The oil production from Cambay basin would increase from 3.91 million tonnes in 1984-85 to 6 million tonnes by 1989-90. This increase in oil production from Cambay basin would be due to further development of various fields, particularly the final development of Kalol field and development of heavy oil fields in north Gujarat areas. There would be doubling of oil production from ONGC areas of Upper Assam and Nagaland from 2.21 million tonnes in 1984-85 to 4.4 million tonnes by 1989-90. From onland areas of ONGC the total production of crude oil during the Seventh Plan would, therefore, be 41.33 million tonnes against the production of 26.66 million tonnes during the Sixth Plan.

6.47 OIL would mainly concentrate on maintaining the crude production rates from their ageing fields of Naharka-tiya and Moran. Both these fields would require additional development drilling and speedier recovery of sick wells to offset the decline in oil production. OIL would produce annually 3.03 million tonnes during the first four years of Seventh Plan, increasing it to 3.38 million tonnes by 1989-90. Thus OIL would be producing 15.50 million tonnes of oil during the Seventh Plan against 12.74 million tonnes in the Sixth Plan.

6.48 As regards projected offshore exploitation (ONGC), oil production in the Seventh Plan would be more or less at the same level as in 1984-85. The oil production from west coast offshore would increase from 20.14 million tonnes in 1984-85 to 20.75 million tonnes by 1989-90. So far as development activities in west coast offshore during the Seventh Plan are concerned, ONGC would carry out further implementation of the accelerated production plan as per the revised assessment. In the case of Bombay High field the main effort would be on sustaining the desireable level of oil production besides achieving a uniform production from the reservoirs. Based on a joint study by ONGC and its foreign consultants, additional platforms would be installed particularly in the southern part of Bombay High for sustaining the production rate as well as increasing the recovery of oil. Peripheral water injection in Bombay High south would start during 1985-86 with installation of the main injection platform (WIS) and water injection well platforms. The peripheral water injection in the southern part would be augmented by updip injection lines from 1987 onwards by converting some of the oil-producing wells into water injection wells. The development of Heera oil field would continue and peak production rate of 1.25 million tonnes is expected to be attained by 1989-90. The full scale development of Panna oil field would be taken up only after the results of trial production, using an early production system (EPS), become available. The EPS system is scheduled to start from 1986-87 with a production rate of 0.05 million tonnes per annum. If the results of trial production are positive, Panna field would be developed during the Seventh Plan. The production from Panna field, is, however, not included in the production profile. Many marginal oil and gas fields have been discovered in Bombay and Ratnagiri areas. ONGC would be developing some of these fields during the Seventh Plan by using one well platform with or without EPS for each field. The marginal fields would be first delineated by exploratory drilling and thereafter the development plans would be prepared. It is expected that development plans would be finalised by 1986-87. The marginal fields are expected to produce nearly 4 million tonnes of crude oil during the Seventh Plan period.

6.49 In terms of development drilling programme, ONGC would be drilling about 1725 thousand metres in onland basins and 717 thousand metres in offshore basins. Similarly OIL would be drilling 567 thousand metres in onland areas of Upper Assam and Arunachal Pradesh. Thus a total of 3009 thousand metres of development drilling has been planned during the Seventh Plan. Compared to the Sixth Plan achievement of 1210 thousand metres, the step-up in Seventh Plan works out to about 149 per cent.

6.50 Therefore a total of 159.14 million tonnes of crude oil is expected to be produced during the Seventh Plan, 102.31 million tonnes would be from west coast offshore whereas the balance 56.83 million tonnes would be from onland areas.

6.51 Gas Production and utilisation: Natural gas (free + associated) will emerge as an important source of energy and feedstock during the Seventh Plan. Gas production which was 7.2 billion cu. metres (19.7 cu. metres per day) in 1984-85 is likely to increase to 14.9 billion cu. metres (40.8 million cu. metres per day) by 1989-90. This increase in gas production would be mainly on account of commercial production of free gas from South Bassein field in Bombay basin. The gas production profile is given in Annexure 6.2.

6.52 In the case of gas the five main aspects are (i) availability, (ii) transportation, surface handling facilities and treatment etc., (iii) fractionation, (vi) downstream utilisation, and (v) conservation.

6.53 So far as availability is concerned, ONGC is producing both free and associated gas from Cambay basin, whereas only associated gas is being produced from Upper Assam basin. The increase in gas availability from these basins would be mainly due to step-up in crude oil production. As regards gas production from Assam-Arakan fold belt (Tripura), free gas fields would be developed for commercial production. The biggest increase in gas availability during the Seventh Plan would be from South Bassein gas field starting from 1986-87. It has been envisaged that South Bassein would attain a peak production rate of 20 million cu. metres per day by 1987-88. Further, the free gas production from west coast offshore may increase to 21 million cu. metres per day in 1989-90 with development of a satellite gas field in west coast. In case of OIL, the production of associated gas has already reached the peak level and a gradual decline would set in during the Seventh Plan.

6.54 As regards surface handling, transportation and gas treatment, no major activity would be required in onland basins except that an integrated gas grid may be installed in Upper Assam of ONGC depending on downstream demand. In regard to offshore gas there would be several important activities. Additional gas compression and dehydration facilities would be commissioned at SH and NO process complexes during 1985-86. With the commissioning of these facilities it would become possible to send all the associated gas produced from Bombay High to shore-based facilities. A gas trunk pipeline connecting South Bassein to Hazira is being laid. Interconnection has also been provided between Bombay High-Uran gas pipeline and South Bassein-Hazira pipeline. At Hazira a gas receiving terminal is being established along with gas sweetening, condensate treatment and sulphur recovery plants. With the completion of Phase I of gas sweetening plant by end 1986 it would become possible to produce gas from South Bassein at a daily rate of 10 million cu. metres. It would also be necessary to complete Phase II of gas sweetening plant in order to achieve the rate of 20 million cu. metres of gas per day from South Bassein by 1987-88. The work on laying of cross-country H-B-J gas pipeline would be completed during the Seventh Plan, along with enroute gas compressor stations. Additional gas fractionation facilities for recovery of Cs/Cs fractions would be set up at Uran. These fractions will form the feedstock for Maharashtra Gas Cracker Complex at Nagothane. As a result of commissioning of gas fractionation facilities at various locations, the production of LPG and NGL would increase during the Seventh Plan.

6.55 The flaring of gas is expected to be reduced considerably during the Seventh Plan. In the west coast, the flaring of gas from Bombay High field is expected to be eliminated on completion of additional gas compression and dehydration facilities. With the commissioning of gas-based fertiliser plants at Thal Vaishat and Hazira, the associated gas produced from offshore would be largely used as feedstock for manufacture of fertiliser. In addition to the above, some gas would continue to be used for power generation in Bombay on a fall-back basis but availability of gas for power generation would depend on gas requirement of fertiliser plants at Thal Vaishat and commissioning of Ca/Ca recovery facilities at Uran. The production of free gas from South Bassein would be mainly regulated by the commissioning and capacity build-up of gas-based fertiliser plants being put in Madhya Pradesh, Rajasthan and Uttar Pradesh and utility power generation plants to be constructed in Gujarat, Rajasthan and Uttar Pradesh. With the increase in oil production from western region, Cambay basin, the availability of gas would also increase. Large quantities of gas have been flared in Assam area in the past. On the basis of present and future commitments in that region there would be no significant surplus gas but in actual practice the gas surplus may continue on account of lesser offtake than the committed quantities by the downstream users and problems with surface gas-handling facilities mainly the gas compression facilities of OIL. Gas utilisation in the North-Eastern region is presently being examined by an Expert Group. Commercial production of gas in Tripura will start from 1985-86. Since the production potential of gas is higher, suitable downstream utilisation schemes should be identified.

6.56 Conservation of surplus gas by reinjecting it back into the reservoir either for pressure maintenance/EOR or for storage needs to be examined. This is particularly relevant to the west coast offshore satellite fields and the North-Eastern region.

6.57 A long-term policy of utilisation of gas is to be evolved with particular reference to substituting gas for middle distillates. The importance of this exercise becomes relevant if the forecast of the experts that by the end of the year 2000 hydrocarbons production of 100 million tonnes may be in equal proportions of gas and oil is realised. On the other hand, our consumption of petroleum products alone may be about 90 million tonnes.

6.58 Technology: For enhancing the oil/gas finding capability, the oil companies should continue the policy of quick adoption of modern and advanced technology developed in many parts of the world. Acquisition of reliable geological data using modern surface and borehole survey technique is one of the areas where use of such advance technology is essential. There will be increasing use of computers in geological correlation, geophysical data processing and reservoir simulation studies. The import of software packages will have to be continued so that no time is lost in carrying out sophisticated computer based studies.

6.59 While dependence on imports in the high technology area will continue, progressive indigenisation of oil field equipment would be supported by ONGC and OIL. It will, however, be necessary to ensure that the quality and delivery schedules of local substitutes are maintained. Indian companies or joint venture companies for providing different oil/gas field services would continued to be encouraged.

Petroleum Products

6.60 Consumption of petroleum products: During the Sixth Plan, the consumption of petroleum products grew at the rate of 5.3 per cent. In the Seventh Plan, it is expected to grow at the rate of 6.4 per cent, reaching about 53 million tonnes in 1989-90. The consumption of middle distillates has been growing at the rate of 6.6 per cent in the Sixth Plan and is likely to grow at the rate of 6.8 per cent in the Seventh Plan, being about 59 per cent of the total consumption in 1989-90. At these growth rates, the consumption of petroleum products may reach about 90 million tonnes by 2000 with the middle distillates constituting about 66 per cent (see Table 6.5).

TABLE 6.5
Demand for Petroleum Products

    1984-85 1989-90 1994-95 1999-2000
Demand for Petroleum products (million tonnes) 38.63 52.67 69.00 87.70
Annual growth rate over the five year ending in the year 5.30 6.40 5.50 4.90
(%) Share of middle distillates (%) 58.10 59.40 63.19 66.19

6.61 The main growth of petroleum consumption is in the middle distillates range comprising Aviation Turbine Fuel (ATF), Kerosene (SKO), and Diesel Oil (HSDO and LDO). But such skewed growth is not compatible with the refining capabilities. While with a hydrocracker, it may be possible to obtain from a suitable imported crude over 60 per cent as middle distillates, the maximum yield from FCC secondary processing facility which is presently installed in most of our refineries is about 52 per cent.

6.62 Considering the fact that India's per capita use of petroleum products is very low, with the increase in population and economic development the consumption of petroleum products and middle distillates in particular is likely to go up. But, on the other hand, with more efficient use of these products the consumption can be kept under control. It is possible to achieve savings of 10 per cent to 25 per cent in transport trucks; kerosene lanterns and stoves provide scope for increasing efficiency in the range of 15 per cent to 40 per cent. With regular and stable supply of electricity, it should be possible to check the increase in diesel-operated irrigation pumpsets and captive power generation units in the long run.

6.63 Refining: The refining capacity existing at the end of the Sixth Plan is 45.55 million tonnes whereas the demand for petroleum products by the end of the Seventh Plan will be 52.67 million tonnes. In order to bridge the gap between the demand and supply of petroleum products, a number of de-bottle-necking and refinery expansion projects will be taken up during the Plan period which will add a refining capacity of 8.50 million tonnes and the refining capacity in the terminal year of the Plan is expected to be 54.05 million tonnes. These projects are: HPCL swing refinery, Bombay (2 mtpa), de-bottlenecking of CDUs and FCCUs at Koyali refinery (2.50 mtpa), Mathura refinery (1.5 mtpa) and expansion of Bongaigaon (1.00 to 3.50 mtpa). To improve the yield of middle distillates, matching hydro-crackers will be set up at Koyali and Bongaigaon along with the expansion projects. Keeping in view the economics of processing indigenous and imported crudes in a new refinery, action will be initiated on the Karnal and Mangalore refineries.

6.64 If the current rate of growth of consumption of middle distillates continues in future, India may be required to establish in every five year plan period three to four new refineries in order to be self-sufficient in refining capacity. On the other hand, refining economics may continue to be unfavourable as it is today or the oil-exporting countries may insist on our buying more oil products than crude oil in which case pipelines from the ports to the main consumption centres will be needed. Long-term planning in this regard is required.

6.65 The crude oil throughout in the terminal year of the Plan is expected to be 48.89 million tonnnes, which will yield about 45.47 million tonnes of petroleum products. The production of middle distillates in 1989-90 will be about 27.14 million tonnes as against the demand of 31.27 million tonnes. The gap of 7.20 million tonnes (out of which middle distillates account for 4.13 million tonnes) between demand and supply of petroleum products will be met through imports. The imports of crude oil are estimated at about 14.4 million tonnes.

6.66 In addition to the de-bottlenecking and expansion projects, the other projects on energy conservation, pollution control, additional products storage tanks, Bongaigaon-Barauni product pipeline and captive power plants at BPCL and HPCL refineries at Bombay will be taken up for implementation.

LPG

6.67 The consumption of LPG during 1984-85 was 0.95 million tonnes. The total availability of LPG may increase to 2.54 million tonnes by the end of the Seventh Plan with the commissioning of Barauni Coker, Hazira LPG, Uran Phase-ll, refinery expansions at CRL, BPCL, HPCL Visakh and MRL, Ankleshwar project, Hazira gas sweetening plant and fractionation plants in Madhya Pradesh, Rajasthan and Uttar Pradesh along H-B-J pipeline. The number of customers may increase from 8.8 million in 1984-85 to 19.6 million in 1989-90. It is proposed to cover extensively the sub-urban and rural areas in the Seventh Plan. Use of surplus LPG in urban transport will also be tried.

Marketing Facilities

6.68 In keeping with the increased consumption, the marketing facilities at various levels will be suitably strengthened. Where the density of petroleum traffic is high, product pipelines will also be considered for giving relief to the railways apart from the fact that the product pipelines are economical and safe.

Research and Development

6.69 A detailed review of the R and D programme in the Sixth Plan has been carried out. It is proposed to strengthen the existing Institutes and increase efforts in those areas considered deficient in the light of the review and the Technology Policy Statement. The component of basic research is at present small and will be strengthened.

6.70 0/7 and Gas; ONGC has presently three institutes, i.e., KDM Institute of Petroleum Exploration, Institute of Reservoir Studies and Institute of Drilling Technology. In addition, two more institutes, i.e., Institute of Production Technology and Institute of Engineering and Ocean Technology will start functioning during the Seventh Plan.

6.71 IPE plans to conduct systematic research in most of the sedimentary basins in India in order to upgrade some of the poorly explored basins into the category of hydrocarbon-bearing basins. Geochemical studies will be carried out in selected basins. It is proposed to farm out selected areas of basic research to various research institutions like NGRI, National Institute of Oceanography, IITs and universities in the country. Geophysical studies will be directed to evolve suitable techniques to carry out seismic surveys in shallow waters all along the coast and to evolve techniques for better acquisition of data from deeper depths and its interpretation. 3-D geological models based on seismic data will be developed. Synthetic chemical work for development of additives for demulsification, corrosion, oil transportation, control of effluents etc. will be taken up.

6.72 The Institute of Reservoir Studies will mainly concentrate on development plans for new fields, labscale EOR studies, designing of pilot EOR projects, implementation of EOR projects, improving the well productivities and recovery of the sick wells. It would also work on the problems of production, transportation and storage of natural gas. Problems connected with production of sour gas will receive particular attention.

6.73 The Institute of Drilling Technology will lay emphasis on problems of drilling in high-pressure and high-temperature areas. The work related to drilling techniques of deep wells, prevention and control of blowout, drilling economics, directional drilling techniques, horizontal drilling, drilling of wells having H^S mud and cement additives, etc. will be accelerated.

6.74 The Institute of Production Technology, being set up at Bombay, will examine problems related to well design, well repair techniques, underwater production systems, process engineering, transport of oil and gas, besides doing work related to treatment of oil and gas.

6.75 The Institute of Engineering and Ocean Technology would be studying the very special problems connected with offshore systems such as structural engineering for offshore structures, corrosion engineering, deep sea monitoring system, barge mounted processing systems, supply and logistics system, etc.

6.76 Oil India Limited has R and D facilities in Duliajan, which will carry out work related mostly to production and drilling problems, application of EOR methods in the fields, etc. Due to extension of activities of OIL, a regular R and D complex may have to be established towards the end of the Seventh Plan period.

6.77 Refining and marketing: In relation to refining processes, design and engineering, several studies are proposed to be taken for application in some of the projects being planned. They have been selected after considering the nature of the crudes to be processed and the quality of the feedstock required by down-stream industries. Broadly these studies are in categories of: Separation Processes; Conversion Processes; Catalyst Development; Hardware Development; and Process simulation and Modelling.

6.78 On the marketing side, studies will be taken up on Product Applications with particular reference to lubricant development and tribology. Indigenous development of additives for petroleum and other industries will also be intensified.

6.79 It is proposed to establish a Centre of Advanced Refining Technology to improve oil industry/R and D interc-tion by providing centrally technical services. With a view to identify and develop the vast number of speciality high value chemicals used in the petroleum sector, it is proposed to set up a Centre for Speciality Chemicals.

Outlay

6.80 The Seventh Plan outlay is Rs. 12,627.67 crores as compared to the Sixth Plan expenditure of Rs. 8,539.61 crores. The break-up between oil exploration and production, on the one hand, and refining and marketing, on the other, is as follows:

  (Rs. crores)
Exploration and production 10652.67
Refining and Marketing 1975.00
12,627.67

The companywise break-up is at Annexure 6.3. The above includes an outlay of Rs. 150 crores for R and D.

6.81 Depending on the progress made in exploration and discovery of new oil and gas fields, additional outlays may have to be provided during the Plan period.

COAL AND LIGNITE

Sixth Plan Review.

Coal

6.82 Demand: The consumption of coal at the end of the Sixth Plan was 139.23 million tonnes as against the target of 155.70 million tonnes. Throughout the Plan period the annual projections of demand were substantially higher than the actuals by 10 to 15 per cent of the target.

6.83 While the production of coal persistently exceeded actual consumption, there was unsatisfied demand in several important consuming sectors. The pithead stocks also mounted to over 30 million tonnes as on 31st March, 1985. This extraordinary situation had arisen due to lack of a 'Systems' approach to production, movement, consumption and stocks. This had vitiated demand-supply management throughout the Sixth Plan period. In the course of the implementation of the Plan the urgent need for introducing refinements in the methodologies for the evaluation of the demand of coal was well recognised. However, much progress in this direction has not been made.

6.84 Production: The Sixth Plan production strategy consisted of opening of a large number of opencast mines, mechanisation of bord and pillar system of mining, progressive expansion of longwall methods of mining and adoption of advanced methods of extraction of thick seams by caving. A start was also to be made on hydraulic mining at selected areas. The achievements in the Plan included step-up of production from open-cast mines to 72.57 million tonnes of total production (49 per cent) in 1984-85, from 32.51 million tonnes (31 per cent) in 1979-80, and planning for a large number of new open-cast mines with increased coal: over-burden ratios, annual capacities and depth limits. Concomitantly, the capacities of equipment have also undergone a change. To the extent it was found necessary, collaboration agreements were entered into with the countries using advanced technologies.

6.85 The production of coal exceeded the targets in the first two years of the Plan but had to be regulated in the remaining period of the Plan. The performance of Coal India Ltd. (CIL) was quite commendable whereas the Singareni Colleries Company Ltd. (SCCL) failed to achieve the targets, especially in the last two years of the Plan. A production of 147.44 million tonnes was achieved in 1984-85 against the target of 152 million tonnes.

6.86 Although a number of important steps were initiated in the Sixth Plan to augment production capabilities, results in accordance with the projections in the feasibility reports could not be achieved, especially in respect of the mines where advanced technologies like longwall mining were introduced. Deficiencies were also noted in production planning, the contribution from underground mines increasing marginally. This has, in its wake, brought in qualitative imbalances and adveresly affected the consumers whose requirements were quality-specific. Inadequate emphasis on the qualitative matching of coal supplies to specific needs caused an adverse impact on the optimal utilisation of coal by some of the major consumers like power, steel and cement industries and led to diseconomies. As a result of detailed studies of the factors contributing to the problems, specific actions were initiated to remedy the situation and improvements were witnessed towards the end of the Plan period.

6.87 Project implementation: As on 28th February, 1985, about 43 per cent of the sanctioned projects were found to be delayed by 1 to 5 years. The delays in implementation of projects were attributed to several factors of which the more important constituted, difficulties in land acquisition, delayed purchase of mining equipment, unreliable power supply, unforeseen geo-mining conditions, unsuitable technologies and inefficent project management. Several corrective action have been initiated to remedy the situation.

6.88 Exploration: The exploration programme in the Sixth Plan was designed to meet the sharp and sustained increase in coal demand upto the turn of the century and in order to combine larger coverage with economy in cost, conventional methods were proposed to be supplemented by new techniques, such as, geophysical surveys, non-coring drilling etc. As against the target of 1.65 million metres of drilling to be carried out in the Sixth Plan, around 1.37 million metres of drilling was achieved by deploying about 205 drilling machines. Although modernisation in exploratory effort was introduced in several areas towards the end of the Plan, there is urgent need for standardising the methodologies and applying them widely at a much faster pace.

6.89 Productivity: Despite the stress laid on increased productivity, the achievement of QMS in 1984-85 is 0.87 tonne against the target of 1.03 tonnes for CIL and 0.70 tonne against the target of 0.88 tonne for SCCL. The productivity remained stagnant in the underground mines. The shortfall in productivity had an adverse impact on the cost of production, among other consequences.

6.90 Infrastructure: During the Sixth Plan severe constraints were observed in the power supply. The supply was inadequate as well as interrupted, resulting in consistent losses in production ranging from 3 to 5.5 million tonnes per annum. This mainly affected the critically needed high-grade non-coking coal production from Raniganj and prime coking coal production from the Jharia field. To partly insulate some of the more important mines, 4 captive gas turbines with 30 MW capacity have been set up and action was also initiated for 3 additional captive coal-based units of 60 MW capacity and 1 fluidised bed boiler of 7.5 MW capacity.

6.91 Rail movement of coal fell short of requirements towards the second half of the Plan period and this disrupted the linkages, contributed to unsatisfied demand arrd led to substantial blocking of scarce financial resources through accumulation of pit-head stocks.

6.92 Quality control: The Sixth Plan witnessed several complaints of a serious nature from the consumers regarding the quality of coal supplied. The complaints basically related to supplies of oversized coal, extraneous matter, high ash and low calorific value. Some of these problems were attributable to difficulties in quality control at the highly mechanised open-cast mines. To remedy the situation a crash programme was initiated for construction of coal handling plants and at the end of the Plan period 59 major coal-handling plants were in operation leading to around 63 per cent of the total coal production being handled by these plants. To meet the increased requirements of the steel industry, around 7.42 million tonnes of additional washery capacity was created while an additional 6.23 million tonnes capacity was under construction. Nineteen washeries with an overall capacity of 32.86 million tonnes of raw coal input capacity were in operation at the end of the Plan. Several steps were initiated to improve the quality of coking coal supplies to the steel plants.

6.93 Coal stocks and stock yards: An alarming feature of the Sixth Plan was the continuous increase in the coal stocks at the pit-heads. With increase of the stocks from 14 million tonnes in 1979-80 to 30.4 million tonnes in 1984-85, after writing off about 3 million tonnes, an amount of about Rs. 550 crores was blocked. The situation did not improve although CIL opened 51 stockyards, as on 31st January, 1985.

6.94 Environmental management: In the Sixth Plan only a beginning has been made on environmental management and with the backlog of largescale environmental damage inherited from the past private owners of mines, the formidable dimensions of the problems clearly emerged. In this direction, yet another area of concern is conservation.

6.95 Financial management: While several steps have been initiated to exercise better financial control to improve returns on investments, the overall performance of the coal industry has been far below expectations. The CIL made a marginal profit of around Rs. 13.8 crores in 1984-85 while in the earlier years there were losses. The performance of the SCCL was also very discouraging. The CIL and SCCL ended up with cumulative losses of around Rs. 1094 crores and Rs. 167 crores respectively as at the end of 1984-85.

6.96 Research and development: The thrust in S and T is directed towards self-reliance in technology related to the coal development programme in the country. During the last eight years, 126 research projects were sanctioned. In the Sixth Plan, the projects taken up for implementation covered eight areas, namely, (i) coal exploration, (ii) coal production, (iii) coal preparation, (iv) coal utilisation, (v) allied engineering, (vi) transportation, (vii) environment and ecology, and (viii) mining electronics. Although some progress was made in certain specific areas like methane drainage, development of domestic 'chullahs' introduction of new mining technology, on an over-all basis, the R and D efforts received a setback for a variety of reasons, the more important of which are, limited relevance of several projects, lack of adequate research culture in the coal companies and extreme paucity of trained research scientists who could be entrusted with the adverse problems. As on 31st March, 1984, of the total projects 43 were completed and 33 were dropped or discontinued as the results flowing from them were not considered encouraging. Of the 50 ongoing projects, 26 schemes are expected to spill over to the Seventh Plan.

Lignite

6.97 The Neyveli Lignite Corporation (NLC) performed at high level of efficiency and the capacity utilisation regularly suppassed the rated capacity in respect of lignite mining and power generation. The thermal plant registered a Plant Load Factor of 77.17 per cent while the fertiliser plant recorded a capacity utilisation of 99 per cent in 1984-85. During the Sixth Plan, expansion of the second mine from 4.7 million tonnes to 10.5 million tonnes/annum and the second power station from 630 MW to 1470 MW were sanctioned. There have been slippages in the implementation of the new projects due to delays in supply of equipment. As against the target of 8 million tonnes of lignite production in the Sixth Plan from first and second mines at Neyveli and the State-owned mines at Gujarat, the actual achievement was around 7.8 million tonnes including a contribution of 0.7 million tonnes from the mines in the State Sector.

6.98 The NLC wiped off their earlier losses and made a profit of Rs. 73.5 crores in 1984-85.

Coal: Seventh Plan

6.99 Demand: An analysis of the sectoral requirement gives an overall demand estimate of 237 million tonnes in terms of raw coal (excluding 9 million tonnes of washery middlings) in 1989-90. Sectoral breakup is given in Table 6.6.

6.100 For the major consumers, steel, power, railways, cement and fertilisers, unit consumers have been indenti-tied, and the norms of consumption adopted take into account quality of coal, technology in the consuming units, substitution for and by other forms of energy, etc.

6.101 The 'Other Industries' group at 7 (b) includes such sectors like, jute, paper, cotton textiles, chemicals and bricks, which have an important role in economic development and their requirements are quality-specific. In the absence of reliable data, a growth rate based on past experience has been used to estimate their demand.

TABLE 6.6
Sectoral break-up of Demand
(million tonnes)

Consuming sector 1984-85
(provisional)
1989-90 Quantity %age Incremental demand in 1989-90 over 1984-85 (%)
Coking coal  
1. Steel and coke ovens 23.70 41.10 17.4 73.4
Non-coking Coal +0.70*      
2. Power 62.21 120.00 50.7 92.9
   (2.15) (9.0)     
3. Railways 9.50 8.00 3.4 (-)15.8
4. Cement 7.09 12.60 5.3 77.7
5. Fertilisers 3.86 6.50 2,7 68.4
6. Soft Coke/LTC 2.15 5.00 2.1 132.6
7. Other Industries         
(a) Captive power    10.00 4.2   
(b) Brick etc. 26.46 29.00 12.3 47.4
8. Export 0.11 0.50 0.2 354.5
9. Colliery consumption 4.15 4.00 1.7 (-)3.6
Total 139.23 236.70 100.00 70.0
   (2.15) or say    
   +0.70" 237.00   
      (9.00)     

Note: Figures in brackets indicate washery middlings. "Imported Coal.

However, an attempt has been made to separate the requirement of coal for the captive power stations in the critical sectors of steel, cement, fertiliser, etc. which shows a significant stepup.

6.102 While consumption increased annually by 5.5 per cent during the Sixth Plan, it is expected to grow at an annual rate of 11.2 per cent during the Seventh Plan. From a consumption level of 139.23 million tonnes in 1984-85, the increase by the end of the Seventh Plan would be 97.47 million tonnes, of which 84.69 million tonnes would be accounted by six sectors, viz., steel and coke ovens, power, railways, cement, fertilisers and soft coke/LTC. Sectorwise annual growth rates of consumption are: power—14.0 per cent; steel—11.6 per cent; cement— 12.2 per cent; fertilisers—11.0 per cent and soft coke/ LTC—18.4 per cent.

6.103 The existing methods of evaluation of demand and supply would have to be substantially refined. Emphasis would have to be laid on more precise evaluation of the requirements of the omnibus groups of 'Other Industries' for which the requirements have been hitherto assessed adopting overall growth rates. A computerised data base would require to be established. A separate cell should be created for demand-supply management on a continuous basis.

6.104 Supply: The supply plan envisaged to meet the demand derives its rationale from the developments that have taken place and the constraints indentified. Basic objectives to match the supply plan with demand are: qualitative requirements of sectoral demands; identification of geographical location of consumers in relation to the existing and emerging production centres; and assessment of infrastructure for movement (rail, road, MGR, coastal ships, conveyors, etc.) and possible modifications/additions thereto to link coal-producing areas with local consuming centres.

6.105 As the performance of steel plants is sensitive to quality of coal and availability of right quantity and quality of prime coking coal may remain critical in the foreseeable future, some imports of low ash coking coal would be continued.

6.106 Production Plan: Coal production both qualitatively and quantitatively should meet the demand after taking into consideration imports and stock depletion. In past, excess of production over consumption resulted only in accumulation of stocks, blocking unnecessarily scarce financial resources. On the other hand, there may be a crisis in coal availability if demand actually picks up beyond the envisaged level and if the production target is finely tuned. Keeping this in view, it is considered that a production target of 226 million tonnes may be justified against an envisaged demand of 237 million tonnes, the gap between demand and production being bridged by 133 using pit-head stocks and some imports of coking coal. To the extent the gap enlarges, coal production can be raised by keeping in readiness some mines with exposed coal by (b) advance removal of over burden. The company-wise production plan is given in Table 6.7. tained both in quantitative as well as in qualitative terms; modernisation of the conventional bord and pillar mining methods for better recovery, lower cost of production and improved productivity;

TABLE 6.7
Company-wise Production Plan
(million tonnes)

Company Existing mines Sanctioned projects Projects to be Sanctioned Total
1, Eastern Coalfields Ltd. (ECL) 14.4 16.7      
2. Bharat Coking Coal Co. Ltd. (BCCL) 10.7 14.7   
3. Western Coalfields Ltd. (WCL) 14.0 48.2 25.0   
4. Central Coalfields Ltd. (CCL) 11.1 40.8      
5. North-Eastern Coalfields Ltd. (NEC) 0.7      
Total: Coal India 50.9 120.4 25.0 196.3
6. Singareni Collieries Co Ltd. (SCCL) 9.5 10.0 4.5 24.0
7. TISCO/IISC/DVC 5.7 5.7
Grand Total 66.1 130.4 29.5 226.0

6.107 During the Sixth plan, shortfall in production targets of ECL and BCCL affected the consumers of superior quality non-coking coal and coking coal, while SCCL's poor performance affected a host of consumers in the southern region. The major problems were law and order and power supply. In the Seventh Plan, a high level expert group would look into all possible alternatives so that the problem of power supply for coal sector in the eastern region is properly tackled. Better welfare and safety measures, control of mine floods and dewatering of mines would ensure fulfilling of targets in the eastern region. Cooperation of the State Government would also be sought resolve all local problems. The malady that has afflicted SCCL is weak management and gross indiscipline. Steps will be taken to ensure that SCCL functions properly.

6.108 Production of 226 million tonnes as targeted gives and annual growth rate of 8.9 per cent during the Seventh plan against 7.2 per cent achieved during the Sixth Plan. The task is not formidable in view of the investments already made and projected and measures taken for strengthening the management. The main focus will be on augmentation of production from mechanised open-cast mines using heavy earthmoving machineries like draglines, large capacity shovels and dumpers etc. Shares of open-cast and underground production by the end of the Seventh Plan would be in the region of around 56:44 against 49:51 in the Sixth Plan. The emphasis in mining technology and systems would be on:

  1. emphasis on underground mines in order that a proper balance of production between the open-cast and the underground mines could be main-
  2. the conventional longwall mining methods would be continued alongwith the development of highly productive powered support faces;
  3. development of in-house capabilities for drilling of shafts and rapid drivage of drifts in order to cut down gestation period and economise on costs;
  4. development of mine transport systems to match the production capacities;
  5. improvement in ventilation and environmental conditions in underground mines to yield higher productivity levels;
  6. introduction of systems and methods for monitoring of different facets of activities in the open-cast and underground mines through use of modern management tools;
  7. extensive introduction of computers for achieving better efficiency in planning, designing and operations; and
  8. adoption of new technologies in open-cast mining which would reduce consumption of diesel oil in transport through systems based on pit-head mobile crushers and belt conveyors.

6.109 The experience gained in the introduction of modern methods of mining by collaborating with advanced countries like the UK, France, Germany, USSR, Poland and Canada should be utilised to standardise mining methods which would suit Indian conditions. Concerted efforts would require to be made for lesser dependence on foreign technologies except under specific and complex mining conditions etc.

6.110 Project implementation and monitoring: The reasons for delays in implementation of coal projects havebeen identified. The following steps have been taken or are proposed to be taken for expeditious completion of projects:

  1. strengthening the reporting and monitoring systems at the area level and company level;
  2. delinking of management of project from day-today production jobs; each project is to be placed under the charge of an independent Project Manager;
  3. supervision in implementation of important projects by the consultants who prepare the project reports;
  4. special cells for acquisition of land required for mining projects;
  5. regular interaction and close cooperation with the State Governments to improve the law and order situation;
  6. advance planning for equipment supply; setting up of adequate workshops and training facilities in repair and maintenance of equipment;
  7. improvement in quality and reliability of Feasibility/ Project Reports;
  8. better contract management with private parties;and
  9. improvement in computer facilities.

6.111 With these measures, it is expected to complete during the Seventh Plan all pending projects (over Rs. 5 crores) taken up prior to 1980-81. Smaller projects taken up before 1981-82 will be completed in 1985-86.

6.112 Exploration: Related to regionwise, quality-wise and sector-wise demand for the period upto 2000, a comprehensive detailed exploration programme for the Seventh Plan has been formulated and is given in Table 6.8.

TABLE 6.8
Seventh Plan Exploration Programmes
(thousand metres)

Company Target 1985-90
1. Eastern Coalfields Ltd. 498.00
2. Bharat Coking Coal Co. Ltd. 405.00
3. Central Coalfields Ltd. 460.00
4. Western Coalfields Ltd. 432.00
5. North Eastern Coalfields Ltd. 45.00
Total—Coal India: 1840.00
6. Singareni Collieries Co. Ltd. 327.00
Total 2167.00

 6.113 The programme of exploration will be directed towards (a) phased conversion of 'inferred' and 'indicated' reserves into 'proved' category in relation to the perspective of quantitative and qualitative region-wise demand for both coking and non-coking coal; (b) emphasis on establishing additional reserves to supplement depletion of reserves from mines under exploitations; (c) creation of a shelf of geological reports to enable selection of least-cost options; (d) extending exploration to the deeper horizons with a view to developing mines for meeting requirements of coal in the Eighth and subsequent Plans; and (e) modernising drilling and exploration methods by introducing/pursuing vigorously advanced technologies including non-coring drilling, surface and sub-surface geo-physical surveys, geo-hydrological investigations, geo-engineering and geo-statistical studies, modern methods of analysis, interpretation and documentation. With specific reference to the formulation of perspective plans, exploration will be carried out for preparation of master plans for major coalfields.

6.114 Productivity: Overall productivity (QMS) of CIL would be raised from 0.87 tonne in 1984-85 to 1.21 tonnes in 1989-90. In Singareni, QMS would increase from 0.70 tonne to 0.89 tonne.

6.115 There has been virtual stagnation in the productivity of the underground mines while in the case of open-cast mines the increase in productivity has not been commensurate either with the equipment configuration or the investment made. This has been attributed to lower-than-optimum utilisation of heavy earth-moving machinery, due to shortage of skilled and/or trained manpower, inadequate workshop and maintenance facilities and spare part supplies and slippages in the construction of new projects. The results achieved from some of the mines where advanced technologies like longwall mining have been used have also been unsatisfactory. The thrusts towards achieving higher productivity levels would be: streamlining the existing facilities for deployment of skilled/trained manpower, substantial improvements in the utilisation of plant and machinery and optimisation in the choice of techniques and technologies in mining.

6.116 Infrastructure: To the extent that the production performance of raw and washed coal would largely depend on the availability of power, special attempts are needed to meet the requirement of the coal industry through assured and uninterruped supply of adequate quantities of power. In particular, a close watch has to be kept on the generation and supply of power from the Bengal-Bihar region in general and the DVC grid. Careful planning should be carried out to match the requirements of sand, timber, explosives, cement and iron and steel. The existing mechanisms in coal companies for monitoring the infrastructural inputs requires to be strengthened. A 'Systems' approach linking the entire chain of major activities would have to be adopted to avoid the recurrence of mismatches between demand-production-supplies due to transport bottlenecks. Movement of coal by coastal shipping and inland waterways needs to be encouraged. Transport of coal by road, which has shown a tendency to increase, would have to be controlled. In this regard priority should be assigned to the implementation of the pilot scheme under consideration for transportation of coal by slurry pipelines. Detailed advance planning is necessary for ensuring timely supplies of plant and machinery as well as spares. Close interaction with suppliers is to be further improved. Improvement in the supply of plant and machinery would be crucial to production and productivity as well as costs of production in the Seventh Plan. Commensurate with the major investments on plant and machinery that have already taken place and further envisaged in the Seventh Plan, creation of adequate workshop facilities to meet regional needs would require to be given special attention.

6.117 Steps would also have to be urgently taken for reconstruction of Jharia Coalfield, diversion of Damodar river etc. to ensure additional supplies of coking coal to the steel plants.

6.118 Coal Quality: There have been a number of complaints about quality of coal supplied to consumers. The problems have been examined by Expert Committees, like Fazal Committee (1983) to look into the problems of coal supply to power plants, Jha Committee (1984) to look into coal supply to steel plants, etc. The main problems identified are: (i) high ash and low coking propensities in prime coking coal supplies to steel plants;

(ii) oversized coal and presence of extraneous matter in supplies to power plants; and (iii) inadequate availability of high-grade coal for chemical, cement, glass, pottery industries, etc. These are proposed to be handled in the following manner during the Seventh Plan.

1. During the Sixth Plan, increase in terms of energy content was lower than the rate of increase in quantity of coal. One reason could be difficulties in quality control in highly mechanised open-cast mines. Greater emphasis will therefore be on better mining methods to avoid admixture of over-burden with coal during mining.

2. There have been complaints that the declared grade of coal is higher than the coal actually mined and supplied. Coal Controller has now been empowered to re-examine and declare the grades.

3. Even with improved mining methods, it may not be possible to remove fully extraneous matter and supply sized coal. Establishment of coal-handling plants with continuous system of crushing, sizing, separation of extraneous matter and mechanical loading is considered an essential pre-requisite to ensure quality of coal supplies. A crash programme was initiated towards the end of the Sixth Plan to instal CHPs. While only 63 per cent of total coal despatches passed through CHPs in 1984-85, this would progressively increase to cent-per-cent by the end of the Seventh Plan.

4. A system of joint sampling both at producers' and consumers' end with bonus and penalty clauses may be enforced.

5. Quality of coking coal supplies has become one of the critical constraints on satisfactory performance of the steel plants. Although the existing steel plants' blast furnaces were designed to operate with 17 0.5 per cent ash in coal, acceptable limit has now been raised to 19 0.5 per cent ash in coal. On the other hand, due to deterioration in quality (ash etc.) in mineable coal, inferior coals are now washed which are not according to designed specifications of washeries and have resulted in their unsatisfactory performance both in quality and in quantity.

The following steps will therefore be taken:

(i) Modifications to the existing washeries to ensure optimum utilisation and better quality products;

(ii) Taking into account the capacity utilisation of washeries, the available capacity is not adequate to meet the requirements of washed coking coal during the Seventh Plan. The situation is critical for prime coking coal. Due to deterioration in quality of blendable coal, washing of blendable coal is also considered necessary. Keeping in view the Seventh Plan requirements and beyond, 15 new washeries have been identified as follows:

Type of Coal No. of washeries Capacity-raw coal (million tonnes)
1. Prime coking 8 19.98
2. Medium coking 4 6.64
3. Blendable coking 3 2.13-2.80
  15 28.75-29.42

 6. There are divergent views on the economic benefits of establishing non-coking coal washeries in the country. There is one existing washery with a capacity of 0.5 million tonnes linked to a cement plant. A non-coking coal washery is also being set up at Bharatpur, Orissa (3.5 million tonnes) to supply coal for NALCO captive power plants. A detailed study based on field results would be carried out to take a final view on the matter.

6.119 Stocking policy: On the basis of a detailed systems analysis of production-despatch-consumption stocks at pitheads and at the consumers' end, a stocking policy has to be evolved to determine the optimal stocks to be maintained at different centres of production and consumption to ensure uninterrupted supplies to the consumers round the year. This will also help phasing of rail movement during the slack season.

6.120 Environment: The Seventh Plan envisages a major thrust in environmental management. There is a backlog of large-scale environmental damage inherited from the past private mine owners. Large areas of land are required for development of mines, which are mostly agricultural and forest lands. Land reclamation after mining thus assumes paramount importance as land required for mining is an intermediate use and not the end use. There is also the need for minimisation of land, air, and water pollution and degradation. In the Sixth Plan only a beginning was made in environmental management. The following steps are proposed for the Seventh Plan:

  1. establishment of Environmental Protection Organisation at different levels and laying down environmental guidelines for coal mining;
  2. setting out a drill for assessment of environmental impact of new projects and creating organisational capability for preparing environmental impact assessment reports prior to mining;
  3. identification and assessment of tasks to be carried out in the old worked out areas e.g., Jharia and Raniganj coalfields; and
  4. monitoring of implementation of environmental protective measures, including land reclamation after mining.
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