indias future coal import rising strongly lt !

Indian power sector unlikely to breathe easy as coal scam rages - 03 Sep, 2012



Indian parliament has become a battleground over the last fortnight with the opposition pitching for removal of PM and cancellation of 142 coal blocks under the CAG scanner. Despite hectic efforts by the ruling party to break the logjam the resolution is no were in sight. In late Saturday development Ms Sonia Gandhi made reconciliatory overtures the leader of opposition for restoration of normalcy in parliament. In a significant climb down Ms Swaraj indicated abeyance of demand for PM’s resignation but stuck to condition of cancellation of all blocks.

Functioning of parliament remaining red herring it is the raw material availability for beleaguered power sector will be the ultimate casualty. Augmentation of coal supply has acquired critical dimensions as the production from current mines has attained saturation. Recent intervention of the PMO and issuance of Presidential decree to the PSU behemoth Coal India Ltd extols the imperativeness of supply sufficiency.

Thermal coal production in India is 402 million tonne FY’12 with a shortfall of 53 million tonne met from imports. With the 12th FYP figures declared for addition of another 88000 MW (64000 MW thermal coal based) thermal coal requirement will bloat to 788 million tonne. At the current CAGR of thermal coal production we would be nowhere near that mark with a projected shortfall of 238 million tonne with imports component swelling to nearly 213 million tonne by the end of 12th FYP taking nearly 2% of the a billion tonne global trade .

Recent outages in Northern Grid plunging nearly half of the country into darkness for 2 days typify the deepening crisis. Coal India Limited, accounting for 80% of the national production, has stagnated due to delayed environmental clearances, land acquisition troubles and little investment in advanced technologies. Plight of the private sector is even more abysmal.

It is noteworthy that there was 8.1% growth in power generation in 2011-12 but still there was peak hour shortage of 10.6%.Average electricity demand has risen to 75 to 80 terawatt hours (TWh) per year from 50 TWh per year just five years ago.

India may boost imports of power station coal to at least 120 million tonnes in 2013 from an earlier forecast of 116 million tonnes. Coal India Ltd said it may increase imports to 33 million tonnes next fiscal year from 20 million for the 12 months.

In the background of a critical shortage staring in the eyes expeditious availability of coal blocks in resource rich nation is the least called for. However environmental clearance notwithstanding the current hullabaloo over allocation and its expected cancellation will be nightmarish.

Increased complexity and sluggishness in block availability is inevitable. Recently the Indian Coal Minister categorically ruled out the auction of 54 coal blocks in the pipeline in 2012 since the procedure is yet to be crystalized. Moreover with raging controversy will make the decision making even more unwieldy. Lack of agreement on the price pooling within CIL and its acceptability by the states is proving to be sticky.

Coming day will be immensely challenging for the power and coal industry with shifting of focus on imports as the domestic supply remained saddled in multiplicity of problems ranging from mining to logistics.