Coal outlook dim, indecision makes it dimmer

Embroiled within a controversy after another, the Manmohan Singh government’s time and attention have been consumed by efforts to get out the fire on “troubled political fronts,” and has now ignored the strength and coal crisis, which stares the country in the face and threatens to leave hand.

Import costly

Such as, production of about 15,000 MW of thermal power, determined by imported coal, has come upon problems following a Indonesian government’s decision making it mandatory for exports to be benchmarked to international prices since September. One of the most impacted by this decision are Tata Power, Reliance Power, Adani Power, JSW Energy and Lanco Infratech. These companies, once bullish on Indonesian coal, bid in the tariff-based competitive process for power projects, in line with the agreements that they had made for long-term fuel stock from Indonesia. The developers figured out their financial along with factors in the projects dependant on an average coal price of $40-$50 a tonne. But which includes changed dramatically, because of the decision of Indonesia, Nigeria and Australia to benchmark the retail price with international movement.

Developers going slow

The Manmohan Singh government continues to be sitting low on the issue in the past few months. Subsequently, the developers have decided to go slow on these projects. Preparing this, Coal India Limited announced it would not be capable to achieve the production target and scaled it down from 452 million tonnes to 440 million tonnes, indicating that private and public coal-fired plants could face serious raw material problems from now on.

The issue were to be debated and decided by way of panel headed because of the Prime Minister, after submission of reports by Planning Commission Deputy Chairman Montek Singh Ahluwalia and Member (Energy) B. K. Chaturvedi.

“The meeting by way of the Prime Minister may be postponed a half dozen times now. We have a complete deficiency of seriousness on the part of the government to confront a real serious issue which will lead to serious power and coal shortages inside coming months. The indecision on imported coal or, as an example, on captive mines clearances could hit auto growth and power production hard,” a senior official said.

Based on Ashok Khurana, director-general, Association of Power Producers, the condition concerns about 20,000 MW of stranded capacity. “A decision must be taken. The bankers and investors are spurning the developers caused by indecision on how to cope with these issues.” What has heightened the misery will be the CIL lowering its production target for the ongoing financial year. They have already fallen less than its April-September target by about 20 million tonnes, recording an output of 176 million tonnes up against the target of 196 million tonnes. The us govenment undertaking has blamed it on inclement weather, including heavy rains in August-September that affected production in almost all its collieries.

India has 75 thermal projects that count on CIL for fuel supplies. CIL offers an 82 per-cent share with the country’s coal production, but continues to be unable to keep pace while using rising demand. In contrast, the situation is critical for the power projects that were facing a significant shortage of coal over the past few months without solution in view. Nearly twelve projects, using a combined capacity of 16,175 MW end up with a day’s stock with him or her, going by recent Central Electricity Authority data.

In accordance with official norms, power projects situated near coalmines are said to have two weeks’ reserve stock and the ones located afar, as a minimum a month’s supply. Of such dozen-odd projects, six possessing a capacity of 11,410 MW are members of NTPC. “The situation to the NTPC projects is reasonably worrisome. We have been getting our daily requirements but there is however no stock build-up. There’s a coal crisis and then for any small disruption may ultimately lead to a power crisis,” a senior NTPC official stated.

At the moment, 30-odd thermal plants have coal stocks of not as much as four days. Depending on approach paper for the 12th Plan, the aggregate paths at the end of the 12 Plan period may be between 900 and 1,000 million tonnes. The domestic output is unlikely to exceed 750 million tonnes, leaving a shortfall in excess of 200 million tonnes to become met from imports. Coal imports need to rise from about 90 million tonnes at the moment to over 200 million tonnes from 2016-17.