India - Jharia Mine Fire Control Technical Assistance Project

Document of The World Bank FOR OFFICIAL USE ONLY MT Cr-)F I fC'H C ('Y ieport. No. :P- 5932--TN Typos: (PR) Title: .THARJA MINE FTPE CWNTNROf. P'C'JE Anthor: POLT,AT. PF.TER ReportNo. P-5932-1N Ext. :3106!:' Ioor :G 3 JF,!h Dept. :SA';2:I MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPM- NT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SDR 8.6 MILLION (US$12 MILLION EQUIVALENT) TO INDIA FOR A JJARIA MINE FIRE CONTROL TECHNICAL ASSISTANCE PROJECT NOVEMBER 30, 1992 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  CURRENCY EQUIVALENTS Currency unit = Rupees (Rs) One Rupee US$ 0.039 One US Dollar = Rs 25.89 MEASURES AND EQUIVALENTS I square kilometer = 0.4 square miles (approx.) ABBREVIATIONS AND ACRONYMS BCCL - Bharat Coking Coal Ltd. CIL - Coal India Ltd. DEA - Department of Economic Affairs GOI - Govemnment of India ICB - Intemational Competitive Bidding km2 - square kilometer LCB - Local Competitive Bidding LB - Limited International Bidding MOC - Ministry of Coal NGO - Non-govemrnental organisation FISCAL YEAR April I - March 31  FOR OFFICL4 USE ONLY INDIA TECHNICAL ASSISTANCE PROJECT Credit and Project Summary Borrower. Government of India (GOI) Beneficiaries: Bharat Coking Coal Ltd. (BCCL) Amounh SDR 8.6 nullion (US$12 rillion equivalent) Terms: Standard, with 35 yeams maturity Onlending Tennrs: GOI will onlend the proceeds of the credit to BCCL at an interest rate cuTrently set at 17% per annum, with a repayment period of 14 years, Including a grace period of two years. Financing Plan: IDA US$ 12.0 million GOI US$ 2.3 million 11 US X million Economic Rate of Returm Not applicable Staff Appraisal Report: Not applicable The report was prepared by Peter Pollak (Prncipal Operations Officer) and Maria Helena Kutcher (Opera- tions Analyst). Ms. Kutcher led the appraisal mission for this project. Messrs. Bateman (Senior Mining Engineer), Mudassar Imran (Senior Economist), Sadhan Chattopadhya (Consultant), Stanley Michadski (Consultant), Berard Maynard (Consuttant) and A. N. Banerjee (Consultant) provided background information for this report. Mr. Bateman also prepared the illustrations. Ms. Kathyn Cherrie typed various drafts of the report The report has been reviewed by Messrs. Karl Jechoutek (Prinicipal Energy Economist) and Christopher Wardell (Prinipal Mining Engineer). The report has been endorsed by Messrs H. Vergin, Diector (ndia Country Department) and Jean- Frangois Bauer, Division Chief (Energy Operations Division, India Country Department) This document has a restricted distribution and may be used by recipients only in the perfornance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  MEMORANDUM AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDfT TO IDIA FOR THE JHARIA MINE FIRE CONTROL TECHNICAL ASSISTANCE PROJECT 1. I subnIt, for your approval, the following memorandum and recommendation on a proposed development credit to India for SDR8.6 million (equivalent to US$12 million) to help fitance a technical assistance project which would assist Bharat Co'xing Coal Ltd. (BCCL) in the prepartion of a program to control the mine fires in the haula coalfield anA to deal with the environmetal and social implications of these fires. The credit would be on standard IDA terms with a maturity of 35 years including five years of grace. The Govenmment of India would onlend the funds to BCCL at an interest rate currently set at 17% per annum, with a repayment period of 14 years, including a grace period of two years. Background 2. IndIs resources of prime coking coal are concentrated in the Jhada coalfield in Bihar. This field produces about 80% of the coking coal required by the Indian steel indusby. The mining of these coal reserves Is now threatened by what is probably the world's largest concentration of mine fires. BCCL, which operates the iharna mines, has identified about 70 major mine fires. Most of these were caused by spontaneous heating of coal left in abandoned shallow underground mines where access of air was relatively unrestricted. Efforts to contain these fires have been largely unsuccessful, and consequently, the area above the fires subsided as the fires progressed; the resulting cracks in the surface provide additional access of air which, in turn, accelerates the pace at which these fires spread. 3. The Government and BCCL are not only co:ncemed about the potential loss of coking coal and the ensuing need for more coking coal imports, but also abou. the damage these fires are inflicting upon the envlrionmen The fires contribute to the already extensive air poliuot!n in the Jharia coalfield. Ihe collapse of the surface above the fires leads to extensive damage to houses, infrastu.,re (roads and railways), farm land and the loss of rivers and ponds. About one milion people live in the Jha.ia coalfield area (276 kirr). If the fire is not contained, more than 100,000 people will have to be resettled over the next 10 yeas Lessons Leaned frm Previous Bank Operations 4. On May 10, 1985 the Board approved the JhaNla Coking Coal Project which provided financial assistance for the development of an underground mine (Pootkee Bulliary) and an opencast mine (Opencast Block II) in the ]haria coalfield The basic objective of this project was to introduce state-of-the- art underground and opencast mining methods iLn CCL's area of operations. Support for the Pootkee BulliMay mihe had to be canceled when it was discovered, during the early stages of project implementa- tion, that the majority of the coal reserves of this mine were not suited for highly mechanized longwall mining Implementation of the opencast mine is now about four years behind schedule, maindy as a result of delays in land acquisition, cumbersome prmureent procedures and a rapidly spreading mine fire. The main obstade has been difficulties in resetting people living in project areas. BCCL as well as nunmr- ous ancillawy industies provide attractive employment opportunities and reatively high wages. As a result, prices of agricultural products are relatively high, and fanners are reluctant to sel their land unless BCCL offers jobs. BCCL, which is highly overstaffed, is reluct&nt to add more people to its payroLl  -2- 5. Two main lessons emerged from these projecs a) BCCL needs extensive technical assistance in areas such as the identification of coal reserves, land acquisition, resettlement and the prevention of mine fires; and b) support in managing the implementation of projects. Few relevant lessons have emnerged from other coal proects. However, BCCL's efforts to contain the fires in the Tharia coalfield have been hampered by imprecise delineation of the boundaries of fires; lack of equipment; lack of an effective fire fighting organization and perseverance in fire fighting efforts; and the lack of a clear strategy for dealing with the fires takng into account conuerci as well as environmental and social concens. Rationale for IDA Involvement 6. The Jharia coalfield contains the world's largest concentration of mine fires. Over the past 15 years BCCL has made numerous attempts - many with the help of bilateral agencies - to extinguish these fires. The results have been discouraging. BCCL has now tumed to the World Bank Group with a request to mount a global effort to find solutions to deal with these fires and mitigate their effects on the environ- ment and the people living in the area. 7. IDA's involvement in the proposed project would assist BCCL in adopting measures to (a) salvage valuable coking coal reserves that are Incasingly blocked by fires; (b) prevent further environmental degradation, damage to towns and infscture facilities; and (c) reduce the need for resetlement and help manage the resettlement of a large number of people later, if necessary. Project Objectives 8. The main objective of the proposed project is to set the stage for investments aimed at extinguish- ing or containing the spread of the mine fires in the jharia coaled. To achieve this objective, the project would provide financia support for a detailed survey of the fires and the preparation of a program that would indicate the most cost-effective approach for dealing with these fires taking into acoDunt econonmc as weRl as socal and environental concems ('fire fighting program'). To ensure that BCCL receives the best possible advice, an international conmltant with extensive evqerience in the xtnguishent and control of coal mine fires wfll be selected. Timely Inplementation of the project will require ectensive interaction between BCCL staff and the consultant BCCL staff wfll benefit from this interaction. To ensure that BCCL will be able to cany out this kind of analysis after the work of the consultant has been com- pleted, agreement wiD be reached with BCCL to set up a 'fire fighting cell' within the company. Initial traing wil be provided by the consultant Key pieces of equipment for this cell will be provided under this project. 9. In view of the considerable adverse effects of these fires on the environment and the people living in this area, the proposed project would also provide funds for the preparation of a program to that would identify measues to nitigate the adverse environental and social effects of these fires ('environmental management plan'); this plan would assist BCCL and the State Governmet in their prepartions for the resettlement of a growing number of people, including tribals, that are curentdy living in areas endan- gered by fires  .3- Poect Descrption 10. The proposed project would consist of two components: a) development of a fire fighting progmm for the Jharla coalfield; and b) preparation of an envronmtalmanagementplan. Agreed Actlons 11. Agreement has been reached with the Govenment and BCCL on the following mapjr actions- a) GOI will appoint, no later an June 15, 1993, an advisory panel consisting of resetatives of the State of Bihar and local NGOs that would advise DMCL in the review of the recommendations contained In the fire fighting program and the envirotal management plan; b) BCCL will set up, no later than AprU 15,1993, a state-of-the-art fire fighfting cel within its ofrgai- zation; c) BCCL will appoint, no later than September 1,1993, a panel of experts that would review the technical feasiblity of the recoummeations contained in the fire fighting program; and d) BCCL will have Its annual accounts, including the specal account and the statement of expendi- tures for the project, If any, audited and submit the audit reports to the Bank within nine months of the end of the fisal year. Environmental Aspects 12. Preparation of the fire fighting progm would involve a review of all avilae information about the mie fies, visits to fire sites, diling of boreholes (for deteminng the exact location of fires), aerial surveys and report writing. The nain me l issue concering this project are therefore the environmental and safety aspecWs of borehole drlling. 13. The ooreholes would be drilled wifi motorized, portable dring rigs capable of drillin verical holes with a diameter of 100-300 mm. Only a few square meters of area are usually required at each site. A major eno l concer is the risk of spreading the fire through uve diling activity itself. To mini- mize this risk, ordy expeieed operators would be employed in driling operations, and care will be taken to seal boreoles b 14. To avoid injury to drilling crews appropriate attire wil be provided by BCCL In additon, provi- sions wi be made to ensure the safW of driling personne from exsr to dangerous levels of cubon monoxide from surface fires as well as fromdrling into the undergrund mine workin Levels of carbon monoxide would be systematicaly monitored at the drilng sites. Safety plans will be nade for an appropriate response to any unforeseen subsidence involving the ddlling equipment Coal lndia has no record of any fatal accidents at any of its several hundred drlling sites operated by Its own employees or by conrtors. However, inor acddents do occur, usually as a result of carelessness 15. DiDing activities will be resticted to land owned by BCCL In the event that drilling Is reqired on land not owned by BCCL, there is legal provision in the Land Acquisition Act wbich would allow BCCL to drill for the purpose of exploring the location of coal resources after a notfying the land owrs. This would not involve complicated consation disputes, and She risk of any delays in prject uIple- sentation is minimaL  -4- Spedal Operational Emphaies 16. The proposed project would support the Ba's emphasis on mitigating environmnl damage and social upheaval associated with economic activity. Project Benefits 17. The proposed project would provide BCCL with access to state-of-the art experience for fighting large mine fires. It would provide BCCL with the opportunity to a) salvage valuable coldng coal reserves that are blzked by fires; b) prevent further environmental degradation, in particular damage to towns, infastructure (roads railways, power transmission and telecommunication lines, etc.) and water supply facilities, as a result of the spread of mine fires, and c) recluce the need for a major resettlement effort. The precisc outcome of the proposed technical assistance to BCCl:s efforts in dealing with the mine fires is difficult to predict. At a minimum, it will provide BCCL with a sound strategy for miidmizt the commercdal, environmental and social cost of these fires Without the proposed project (and no further follow-up in the implementation of its recommendations), Indias imports of coking coal would increase by US$180 million each year; in iddition the annual costs of resettlement would be around US$35 million. These estimates do not take into account the damages to the environment, the loss of reserves and the increase in the cost of mining coal as a result of the fires. Risks 18. The project faces three riks: (a) a delay in the implementation of the project; (b) the possibility that economically justifiable actions could be identified for only a small number of the fires; and (c) a lack of commitment on the part of BCCL to implement the fire fighting measu recommended by the consult- ant. 19. To minimize the risk of a delay in project implementation, the search for qualified consultants has been initiated; the respective responsibilities of the international cnsultant and BCCL's staff for the implementation of the project have been worked out 20. Coal mine fires are difficlt and costly to extingsh. Excavation of the fire is in most cases the only way to prevent re-ignition of the coal. Blanketing of underground fires tends to slow only their further progress. In the case of large fires, the best option is to mine as much of the coal as possible and allow the fire to bum itself out Excavation, blanketing and other, technically more sophisticated measures will most likely be justified, on economic and environmental grunds, only for part of the fires. The fire fighting program nevertheless will provide BCCL with a strategy for dealing with the fires in ways that are cost-effective and environmentally sound. 21. Delays in the implementation of the recommended fire fighting measures would greatly enhance the risk of fires 'growing together' and thus making the effort to edinguish them more difficult and costly. Eventually this would lead to the complete loss of India's ordy reserves of prime coldng coal and require massive resettlement of people. It would be unlikly that the Govenment would permit such an economic and environmental disaster to happen.  -5- Recommendation 22. I am satisfied that the proposed credit would comply with the Artidles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Lewis T. Preston President Attachments Washington, D.C. November 30, 1992  INDIA TECHNCAL ASSLSTANCE PROJECr Technical Anntex The Mine Fires In the harla Coalfield 23. The Jharia coalfield is a sickle shaped coal basin loated In the State of Bihar in the northeastern part of India. The field was discovered In the late nine.eenth century. It covers an area of 276 kmt and has a population of about one million. About 11% of the population (110,000) are scheduled