Power projects face huge import costs

Power projects face huge import costs
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First Published: Thu, Feb 15 2007. 02 42 AM IST
New Delhi: Concerns are mounting in the energy sector about the vulnerability of the country’s ambitious ultra mega-power projects over coal and gas supply issues.
Just over half of the nine proposed ultra-mega power plants—4,000 megawatts each—are coastal projects that are totally dependent on imported coal and will require up to 75 million tonnes of coal each year starting 2012.
This means that the amount of coal India imports, around 20 million tonnes now, will start soaring at a time when demand for coal across Asia is also rising, pushing up prices significantly.
“This concern stems from the fact that a spike in the international oil and gas prices may affect the prices of coal as well,” said a senior government official involved with the projects who did not want to be named.
Even though 78% of the country’s coal production is dedicated to power generation, the sector is expected to need 545 million tonnes of coal by 2012, not counting the new needs of the ultra-mega projects. Domestic coal supplies are only expected to provide around 482 million tonnes, leaving a shortfall of about 63 million tonnes.
As a result, energy officials see India having to import nearly 115 million tonnes of coal, when all the coastal ultra mega projects come online.
The one saving grace is that imported coal typically has a higher calorific value, which reduces wastage and also improves the generation efficiency of these power projects.
Analysts estimate that one tonne of imported coal is equivalent to 1.56 tonnes of domestic coal, which explains why 115 million tonnes of imported coal would suffice for a total coal shortage of around 138 million tonnes.
The coal issue is coming into focus even as there is already a shortage of gas for power plants.
The power ministry has admitted that the non-availability of gas and an ongoing court case between NTPC Ltd and Reliance Industries Ltd has resulted in affecting new capacity to the tune of 1670MW in the 10th Five-Year Plan. The affected projects are NTPC’s Kawas (725MW) and Gandhar (725MW) projects and North Eastern Electricity Power Corporation’s Monarchak project (220MW).
Even the comptroller and auditor general of India has pulled up the government for commissioning six gas-based power plants without fully tying up gas supplies. NTPC had commissioned six gas-based power projects at Anta, Auriya, Kawas, Dadri, Gandhar and Faridabad with a generation capacity of 3,657MW, all of which are facing a gas supply crunch.
Meanwhile, in order to source coal, power project developers including NTPC Ltd and Tata Power are scouting for coal block opportunities abroad. It will be a challenge. “NTPC imports only 4% of its total coal requirement of 100 million tonnes per annum,” notes one industry analyst who didn’t want to be quoted.
Of the nine ultra-mega power projects coming up, those in Mundra (Gujarat), Girye (Maharashtra), Tadri (Karnataka), Krishnapattnam (Andhra Pradesh) and Cheyuur (Tamil Nadu) are coastal projects that will rely on imported coal.
The other four, in Sasan (Madhya Pradesh), Akaltara (Chattisgarh), Tilaiya (Jharkhand) and Jhasuguda (Orissa) are coal pit-head projects.
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First Published: Thu, Feb 15 2007. 02 42 AM IST