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Coal India Projects Almost Good to Go, Gets Environmental Clearance

Three coal projects of India's state -owned coal company Coal India Ltd. (CIL) have been recommended for environmental clearance, a much welcomed good news after the company slashed its output target for fiscal year 2012.

Recommended to receive the green clearance were CIL's Samleshwari OCP, Dakra OCP and Gose OCP coal projects. A combined 22 million tonnes per annum (MTPA) of coal are projected from the Samleshwari open cast project in Orissa and Gose OCP of CIL subsidiary Central Coalfields in Hazaribagh, Jharkhand.

MTPA Dakra OCP had been waiting clearance of its mining lease renewal.

In December, CIL announced production targets for 2012 have been slashed to 440 million tonnes from 453 million tonnes, owing to delays delays in the release of government grants of forestry and environmental clearances to coal projects, as well as heavy rainfall and industrial strikes.

In frustration, CIL said the delays for environmental clearances and renewals have hampered investment decisions on 67 new projects. It had also distressed expansion works in ongoing projects, thus leading to a 200 MT annual production loss.

"Our 168 projects are pending environment and forest clearances at the Centre and State levels... we are unable to make any investment in these," N C Jha, CIL chairman, had said.

It would have been just as easy for India to acquire coal especially since it is actually sitting atop 10 per cent of where the world's coal reserves are located, approximately worth 267 billion tonnes. But most of Indian coal reserves lie in forest areas and cannot be mined for environmental concerns.

As per procedure, forest clearances should be granted within 300 days. However, as per CIL an assessment, the process takes longer, in some cases even extending to six years. What's more, getting the final clearance also takes an equally long time, Jha said.

Some 114 public-sector funded projects are currently lined-up waiting for stage one clearance, 92 of which are waiting for the green signal at the State level, with the remaining from the Ministry of Environment and Forests.

A separate 54 proposals have been stuck, waiting for the final clearance, including 31 at the State level.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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