India - Coal Sector Rehabilitation Project : environmental impact assessment (Vol. 2 of 2) : Environmental impact assessment of the Indian coal sector

EC) COAL SECTOR REHABILITATION PROJECT ENVIRONMENTAL IMPACT ASSESSMENT OF THE INDIAN COAL SECTOR Prepared by COAL INDIA LIMITED WORLD BANK PRJOJECTS DIVISION 10 NETAJI SUBIDAS ROAD CALCUTTA 700 001 MAY 1995  Table of Abbreviation BCCL Bharat Coking Coal Ltd. BOD biochemical oxygen demand CBA Act Coal Bearing Areas Act CCL Central Coalfields Ltd. CPCB Central Pollution Control Board CMPDI Central Mine Planning and Design Institute Ltd. COD chemical oxygen demand DGMS Director General of Mine Safety EAP Environmental Action Plan ECL Eastern Coalfields Ltd. EIA Environmental Impact Assessment EMP Environmental Management Plan UEr" heavy-earth moving machinery IDA International Development Assistance LA Act Land Acquistion Act LED load haul dumper MCL Mahanadi Coalfields Ltd. MOEF Ministry of Environment and Forests HP Maharashtra Pradesh NCL Northern Coalfields Ltd. NGO non-governmental organization OB overburden PAP project-affected person RAP Rehabilitation Action Plan RSR Resettlement and Rehabilitation RPM respirable particulate matter SDL side discharge loader SECL South Eastern Coalfields Ltd. SIA Social Impact Assessment SPCB State Pollution Control Board SPM suspended particulate matter TSS total suspended solids UP Uttar Pradesh WCL Western Coalfields Ltd. / si - . .4,.  Table of Conteuts INTRODUCTION . ......................................................... 1 PART I. SECTORAL AND PROJECT CONTEXT ................................. 3 Sectoral context ................................................... 3 Project context . .................................................... 4 PART II. ENVIRONMENTAL MITIGATION AND REMMEIAL ACTION .... ............ 9 CHAPTER 1 EFFECTS OF COAL MINING ON THE ENVIRONMENT .................. 9 CHAPTER 2 ENVIRONMENTAL LAWS AND REGULATIONS ......................... 17 Legislation . ...................................................... 17 Regulations . ...................................................... 19 Institutional arrangements ........................................ 23 Environmental Management Plans iEMPs) ............................. 26 CHAPTER 3 COAL INDIA'S ENVIRONVENTAL POLICY .......................... 2B Objectives ......................................................... 28 Strategy ........................................................... 28 Mitigating environmental management programmes .................... 29 Organisational structure for environmental management .... ......... 35 PART III SOCIAL ISSUES ............................................... 38 Need for land . .................................................... 39 Social implications ............................................... 41 Laws and policies ................................................. 42 Implementation of Rehabilitation Action Plans under the project ... 49 PART IV OCCUPATIONAL HEALTH AND MINE SAFETY .......................... 62 Introduction .......................................... 62 Mine safety organisation in the Indian coal industry .... .......... 68 Occupational health hazards ....................................... 70 Mine rescue program . .............................................. 72 Welfare measures . .................................................. 73 ANNEX 1 PROJECT DESCRIPTION ......................................... 75 ANNEX 2 COAL MINING TECHNOLOGIES .................................... 83 ANNEX 3 REVEGETATION OF OVERBURDEN DUMPS ............................ 89  ANNEX 4 OVERBURDEN HANDLING IN OPENCAST COAL MINES .... .............. 91 ANNEX 5 FIVE YEAR CORPORATE ENVIRONMENTAL ACTION PLAN ............... 95 ANNEX 6 ENVIRONMENTAL ACTION PLANS ................................. 113 BIl ............................................................. 115 DUDHICHUA ......................................................... 121 JAYANT ......... 127 JHINDURGA ......... 133 NIGAHI ......... 139 ANANTA ....... 145 BELPAHAR ....... 153 BHARATPUR ....... 159 JAGANNATH ....... 165 LAKrANpUR .......... -171 .AM. ..SWARI.......... .177 DURGAPUR ......... 183 NILJAI ........... 189 PADMPUR ........... 195 SASTI ........... 201 UMR-ER ........... 207 KID HESALONG ........... 213 pAREP EAST ........... 221 RAJRAPPA ........... 227 BISRAMPUR ........... 233 DHANPURI ....... 239 DIPKA ......................................................... 245 GEVRA .. . ..... .... ........... ............................ . 251 KUSI..NDA......... -257 MANIRPUR ........ 263 BANGWAR ........ 269 BEEHRABAND ............ 275 CHURCHA WEST ............ 281 KURJA ............ 287 PANDAvpARA ............ 293 SINGHALI ........................................................ 299 ANNEX 7 ISSUES RAISED DURING CONSULTATIONS ON EAPS .... ............. 305 ANNEX 8 RESETTLEMENT AND REHABILITATION POLICY OF COAL INDIA ....... 309 ANNEX 9 ENVIRONMENTAL AUDIT OF SELECTED SUBPROJECTS .... ............. 317 ANNEX 8 ENVIRONMENTAL POLICY OF COAL INDIA LIMITED .... ............. 319  PREFACE This document was prepared by Coal India Ltd. to support its pending application for a Coal Sector Rehabilitation Project. Environmental and social mitigating actions are an integral part of the proposed investments. However, in consultation with the World Bank, it has been decided to formulate a freestanding, IDA-financed environmental and social mnitigation project, which would precede the investment project. This Sectoral Environmental Assessment covers both projects. Preparation of this document extended over a two-year period. The requirements for resettlement and rehabilitation action are shown as they presented themselves at the time the Rehabilitation Action Plans were prepared in 1994. These Plans will be updated in the course of project implementation. After this document had been prepared, Coal India has informed the Bank that it plans to finance the investments for the six underground mines, that were originally included in the project, out of its own resources. The proposed investment project will now support investments in 25 opencast mines.  INTRODUCTION Considering the size of its economy, India is poorly endowed with energy resources. It's major source of commercial energy is coal. Current reserves are sufficiently large to meet India's demand for coal over the next 250 years. By comparison, oil and gas reserves will last only for another 15-20 years. By international standards India's per capita consumption of energy is among the lowest in the world. Food security and even modest improvements in the standard of living of almost a billion people will increasingly depend on the availability of relatively inexpensive energy. Unless major technological breakthroughs alter the options India faces for meeting its rapidly growing energy demand, the country has little choice but to rely on the development of its coal reserves. To be sustainable this strategy requires that: * the Government adopts policies that ensure that energy is used effi- ciently; and that * coal producers take whatever steps are required to minimise the adverse effects of coal mining on the environment and people. In 1975, ownership and management of almost all Indian coal mines were transferred to a Government-owned corporation, Coal India Limited (Coal In- dia). The exceptions were some captive mines belonging to steel plants and a few mines owned by the Government of Andlra Pradesh. Through its seven subsid- iary coal companies, Coal India now produces about 90% of India's coal output. After nationalisation of the coal industry, the Government took full control of all major management decisions for the coal sector, including coal pricing, transport and allocation, and the financing of investments. Coal India was left with a single concern: to attain the coal output targets set by the Gov- ernment. Soon after nationalisation Coal India recognised that underground mines, which at that time accounted for over 70% of production, would be un- able to keep pace with rising demand for coal. To meet this demand, Coal Izdia adopted a strategy that relied increasingly on opencast mining. This had two advantages: opencast mining significantly lowered the cost of coal production and made it possible to increase production quickly. This change of mining technology led to a rapid expansion of production from about 90 million tonnes in 1977 to the present rate of over 250 million tonnes. While the reliance on opencast mining made it possible for Coal India to meet the increase in coal demand and contain the cost of coal mining, it brought with it the displacement of large numbers of people and extensive damage to the environment. The sheer size of opencast mines leads to large- scale disturbances of the surface topography, build-up of overburden dumps, generation of fine airbourne dust from blasting and transport of overburden  -2- and coal, noise from the use of heavy earth moving equipment and degradation of the surface and ground water regimes due to contamination from waste mate- rials and hydrological changes from the drawdown of ground water. Underground mining, though less environmentally damaging, contributes to the degradation of water quality through the discharge of contaminated mine water and the disruption of ground water regimes. In addition, underground mining brings with it smoke pollution, surface caving (from underground fires), and surface instability and subsidence due to the collapse of mined- out workings. All of these impacts can be mitigated, and to some extent avoided all together, through appropriate mine designs and operational prac- tices. In response to growing concerns about environmental and social issues in coal mining areas, the Government of India and State Governments have begun to establish, over the past two decades, a legal and institutional regime for the protection of the environment. Like many other industries, the coal industry faces growing opposition to further expansion in many areas unless it can demonstrate that it can carry out its operations in an environmentally and socially sustainable manner. Pull compliance with environmental standards, fair and comprehensive treatment of local people affected by projects, and the effective reclamation of lands to a productive or environmentally acceptable end-use will be the standards by which the industry's performance is measured. This document was prepared by Coal India to provide the World Bank vith an overview of the efforts the Indian coal industry and the Government are undertaking to mitigate the adverse effects of coal mining on the environment and the people living in mining areas and working in coal mines. Its prepara- tion was triggered by Coal lndiL Ltd.'s request for a loan from the World Bank to finance replacement of equipment in existing mines and equipment for com- pleting the development of mines or for expanding production of exist- ing mines, as well as the expansion and rehabilitation of mining operations. This document is based on extensive surveys of the environmental and social effects of coal mining that were carried out by international consultants, several Indian non-governmental organisations (NGOs) and the staff of Coal India. The findings of these surveys have led to substantial revisions of Coal India's approach to managing environmental issues and, perhaps most impor- tantly, its policy for the resettlement and rehabilitation of people affected by its projects. This assessment consists of four parts. The first part provides a brief description of the project; the second part focuses on the environmental ef- fects of coal mining and their mitigation and the project-specific remedial actions; the third part deals with the impact of the proposed project on the people living in mining areas; and the fourth part provides an overview of the occupational health and safety aspects of the sector and the project.  -3- PART I. SECTORAL AND PROJECT CONTEXT 1.01 This part briefly describes the sectoral backdrop against which the proposed Coal Sector Rehabilitation Project has been designed. The first sec- tion deals with the sectoral context. It argues that because of India's size, its lack of transportation infrastructure and the fact that it has relatively large coal reserves, coal-based electric power has emerged as the most effi- cient way to meet India's rapidly growing demand for energy. Sectoral context 1.02 DoeIza sMo or coAL. Coal is India's most important source of commerciaLl energy. It currently meets about two-thirds of India's energy needs. A ccm- parison of reserves, production and consumption of major commercial energy resources in India highlights the extent to which coal dominates India's en- ergy economy. Considering that India's coal reserves are large enough to meet projected demand for the next 250 years, and the fact that most of these re- serves can be produced at significantly lower cost than other energy resources (taking fully into account associated environmental and social cost), coal will continue to play a dominant role in the years to come. As such, coal will remain the cornerstone of the Government's strategy for the foreseeable future unless there is a drastic shift in the relative prices of energy resources. 1.03 This strategy has to be assessed in the context of the medium and long- term prospects of India's power sector which consumes the bulk of India's coal production- India's per capita power consumption is among the lowest in the world. Even with pricing policies that would bring electricity tariffs in line with the long-term cost of production, the demand for power, and therefore for coal, will grow rapidly. To meet the growing demand for power and eliminate the persistent gap between supply and demand, the Government estimates a need for additional capacity of around 7,000-8,000KW per year. 1.04 DUmUD xm= cuAomc. To close the gap between power demand and supply, India will have to develop the full range of energy sources existing in the country while putting much greater emphasis on efficient pricing, demand side management (DSM), and increased efficiency in the use of existing generating transmission and distribution capacity as well as the utilisation of electric power. 1.05 EmzaK cowswxaTw. The prevailing low energy prices, when combined with the cost plus pricing mechanisms for many industrial products, provide little incentive for industry to conserve energy. Studies on India's energy conserva- tion potential have shown that pricing of power at long run marginal cost would reduce the need for additional capacity by almost 1,000MW per year. The  -4- macro-economic reforms undertaken by the Government since 1991 are now gradu- ally bringing about an environment in which significant DSM activities could take place. In the expectation that major price reforms will be implemented, DSM programmes are now being formulated in several States of India with sup- port from bilateral and multilateral sources (including the World Bank). Over the medium term, these programmes are estimated to generate energy savings of about 500MW per annum. 1.06 RiUmmuz wza. The longer term scope for renewable energy development is estimated at over 20,000MW for wind and 5,000MW for mini-hydros, plus about 75,000MW for larger scale hydros. While some solar PV applications appear economical in remote areas, it will take a few more years for them to become economical in grid connected use. 1.07 C=umxoua. It follows from the above that: * after allowing for both price and non-price DSM measures and after fullest use of feasible alternative energy programmes, conventional hydro and thermal power projects will need to contribute some 5,000- 6,000MW of additional capacity per year; * the immediate prospect of hydro projects in India is not bright because of resettlement and rehabilitation problems and other envi- ronmental issues; in addition, * in view of India's limited gas reserves, and until gas import op- tions have been proven to be technically and economically feasible, India has little choice but to continue investing in coal-based power generation. .08 These conclusions are reinforced in light of India's current level of development: an estimated 500 million people in India have no access to elec- tricity service, and a majority of households still rely on fuelvood and dung for cooking. Although research and development of alternate energy resources for cooking are in progress, the use of these traditional fuels will continue to increase in a population growing at about 2% per annum. Unless power gen- eration and distribution systems improve and increase, this trend will result in unsustainable pressures on forests, soil and water resources, and add to the degradation of the general environment that is already too apparent in many parts of India. Project context Origin of the project 1.09 Pzmnr.-ow or sU3Dmmu aunK. Until recently the Government financed between 70% and 90% of Coal India's investments. After the foreign exchange and budget crisis in 1991, the Government began to phase out its budgetary support for  -5- Coal India's investments (Fig- ure 1.1). BecaUse internally Figure 1.1 The phasing-out of Government generated resources were in- financial support to Coal India sufficient, over the past Rs billion three years Coal India's ca- Coal India's pacity to produce coal began investmente to erode gradually. Increas- Part of Government support was usedD ingly, equipment that has 15 to finan working outlived its usefulness can no capital longer be replaced; and the lack of spare parts is forcing managers to 'cannibalise' part l/ of their equipment. No new projects have been started. Without a major injection of 5 financial resources, Coal Gon/ India will enter a downward support spiral of declining profits and diminishing capacity to borrow (as indicated by the 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 downward trend of the debt SourcO: Coal India service coverage ratio in Figure 1.2). 1.10 PYuoa ouuwrnsn. Over the past two years, the Government of India and Coal India have implemented reforms aimed at making the coal industry commer- cially viable and financially self-sustaining. The primary objective of the proposed loan is to support this reform agenda and Coal India's transformation into a commercial company whose operations are environmentally and socially sustainable. The transformation, which would encourage, inter alia, reliance on market forces in the pricing and distribution of coal, closure of uneco- nomic mines, more extensive use of contractors, opening of the industry to private investors, phasing out of subsidies to loss-making operations, and investments in improving operational efficiency as well as coal quality, will be costly. The proposed loan from the Bank and the cofinancier will allow Coal India to meet part of these costs. The remainder will come from a projected increase in internally generated resources (due to efficiency improvements and the reforms that will be implemented under the programme) and some modest market borrowings. 1.11 In order for the programme to achieve the desired long-term financial impact, it would: * support investments in opencast and underground mining operations that are projected to yield the highest economic returns; * provide technical assistance in support of the programme; and  * assist Coal India in miti- rigue 1.2 2h* iact of the prpoed gating the adverse effects projectlon of mining operations on the environment and the C4R1 Inda * eoal production people directly affected xillix tons of coal 320 by mining activities. 300 with project 1.12 Pnamum =uw ornu. The bulk of 290 the proposed loan would finance the purchase of mining equipment for 31 260 v