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New Delhi: India’s power generation utilities reported a generation loss of 8.7 billion units (bu) in the current fiscal till February due to a shortage of coal, junior power minister K.C. Venugopal told the Rajya Sabha on Monday.

By Bloomberg

Such losses will dent revenue at the utilities but not profit, because state utilities have to pay a fixed amount to the power producer even if they do not draw any electricity.

Meeting electricity demand is key to achieving the government’s target of 9% annual growth in Asia’s third largest economy.

It takes around 5,000 tonnes of coal to generate 1 megawatt (MW) of power. India has 75 thermal power projects that depend on state-owned Coal India Ltd (CIL) for supplies. With the supply of domestic coal at a low, utilities have to burn imported coal, which is increasing the cost of power, leading to state electricity boards (SEBs) becoming averse to such purchases.

The worsening fuel crisis found mention in the Economic Survey presented in Parliament on Thursday, which was critical of state-owned CIL, terming it monopolistic and called for competition to fuel mining growth.

Power projects are the worst hit by falling coal production as the sector is the biggest consumer of the fuel, absorbing 78% of domestic production. India has an installed power generation capacity of 190,593 MW, of which 55.3% or 105,437.38 MW is coal-based.

The world’s largest coal miner is struggling to meet its target for the current fiscal as floods in east India and a strike by workers has crippled production, which is already under stress due to the lack of new mines.

Only 320 million tonnes (mt) of coal is expected to be supplied to the power sector by CIL against the committed 347 mt in the current fiscal. The state-owned firm mined only 431 mt in 2010-11 against a target of 461.5 mt because of stalled projects. Its target in the current fiscal is 452 mt.

Mint reported on 25 October that NTPC, India’s largest power generator, may fall around 18 bu short of its potential production capacity in the current fiscal as SEBs shun purchases of expensive electricity produced with imported coal. The expected shortfall in power generation by the firm is a 38% rise over the last fiscal, when it fell short of its generating capacity by 13 bu.

Even as power projects situated near coal mines are supposed to have a reserve of two weeks, while those located far from the mines should have at least a month’s supply in reserve. India is facing its worst coal shortage with power projects running on minimum supplies. This has forced the country to lower power capacity addition targets for the 12th Plan by as much as 25,000 MW to 76,000 MW. Much of the earlier proposed addition of 100,000MW was also expected to be coal-based.

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