A significant chunk of India’s thermal power capacity—about 11,000MW— added in the last two years by both private and public sector companies is ready but cannot be used because promised supplies of coal will not be delivered, according to the Central Electricity Authority, or CEA, the apex power sector planning body.
Coal suppliers, say analysts and officials, are reneging on their commitments because they have not commenced production in their mines—in some cases because the coal mines haven’t received environmental clearances.
This setback comes against the backdrop of soaring demand that is outstripping power supply and causing regular outages across India well before the peak summer usage months arrive.
India has an installed power generation capacity of 141,080MW and added 11,000MW, or 8% of total capacity, during 2006-07 and 2007-08. But this new capacity, while synchronized and tested, hasn’t become fully operational. “These projects were not generating power. There is a supply-demand mismatch...there is a shortage of coal on account of coal mining not keeping match with the generating capacity,” said a CEA official who did not want to be identified.
According to the government’s recent Economic Survey 2007-08, coal production has decelerated from a high of 6.2% in 2005-06 (April-December) to 4.9% in the corresponding period in 2007-08.
“Letter of assurances (LoAs) of around 200 million tonnes per annum (mtpa) have been issued by the coal ministry as per the requirement of the coal distribution policy, which states that 100% demand of the power sector has to be met. However, there is no coal available to cater to these LoAs. The delays in getting environment and forest clearances (for coal mining) have aggravated the problem,” said a coal ministry official who also did not want to be named.
Coal shortages have become a cause of worry as they might impact the overall Indian economy, which grew by 9.6% last year and is expected to grow by 8.7% this fiscal.
Around 67% of India’s total power generation capacity is based on coal. The power sector has a present coal demand of around 390mtpa. However, even though 78% of India’s coal production is dedicated to power generation, projected supply falls well short of demand. The sector, excluding the planned ultra mega power projects, is expected to need 545mt of coal by 2012, compared with domestic coal supplies of around 482mt. The shortfall will have to be made up through imports.
India’s coal imports, currently estimated at 20mt, are expected to double in the next five years as more thermal power projects become operational.
“There is a severe coal shortfall in the country. Out of 165-odd captive coal blocks awarded by the government, around 130 blocks are for the power sector alone. However, the blocks have not been productionized due to procedural delays such as environmental clearances. Even the coal mining plans of Coal India Ltd are not realistic, and they have been facing a lot of difficulty in project implementation due to delays in clearances,” said Dipesh Dipu, a manager with audit and consulting firm PricewaterhouseCoopers.
Procedural and infrastructure delays have already upset the captive coal mining plans of NTPC Ltd, India’s largest power generation company, as reported by Mint on 11 October. India has 256 billion tonnes of coal reserves of which around 455mtpa is mined.