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Indian coal imports to rise to 185Mt by 2017, support infrastructure still missing
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17th July 2012
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KOLKATA ( - India would need to import 185-million tons of coal by 2017 in order to meet the increasing gap between demand and supply and achieve its energy generation targets, the country’s Planning Commission has said.

In a working note, the Commission pointed out that the importation requirement could move even higher than the projection if domestic production did not increase by at least some 7.5% a year.

India’s significant importation requirement forecast was considered challenging when faced with the fact that international coal trade was estimated at one-billion tons a year against a total global consumption of six-billion tons a year, the commission cautioned.

The country has also set an additional power generation target of 88 425 MW by 2017, against a capacity addition of 54 964 MW achieved between 2007 and 2012. During that period, domestic demand for coal increased 8% against a domestic production growth of 4.61%.

The country’s largest domestic supplier, Coal India Limited (CIL), which accounted for over 80% of domestic supplies, achieved production of 434-million tons in 2011/12, without notching up any growth and had been set a target of 464-million tons in 2012/13.

Not only was the scale of required importation laid down by the commission daunting, but India was yet to evolve supporting systems for higher shipments, such as pricing mechanisms, logistics capability and infrastructure, an official in the Coal Ministry commented.

The government was insistent that a price pool mechanism be adopted by CIL for domestically mined coal and imports. However, CIL has officially opposed a pool price mechanism on the grounds that the landed cost of imported coal would be substantially higher than domestic coal and a pooled price would push up the price of coal in the domestic market.

CIL has argued that not only would increasing the sale price of coal be politically opposed, several thermal power plants operated by provincial governments would not accept an increase in price as they were financially distressed and unable to pass on higher costs to consumers.

The creation of a Coal Regulatory Authority with the power to fix prices has also been pending for several years with the required law still in the drafting stage.

Citing examples of infrastructure deficiencies that could derail plans to meet energy needs through coal imports, Coal Ministry officials noted the total handling capacity of the 12 major ports in the country was 575-million tons a year with coal handling capacity at about 54-million tons a year.

Between 2007 and 2012, the Indian government had proposed awarding contracts to 23 ports, creating an additional capacity of 226-million tons a year; but only three such projects had been awarded, which would create a capacity of 79-million tons a year.

The inland transportation of coal, pitheads to power plants or ports to consumers, which was entirely dependent on railway, was even worse, the official added.

Even with a stagnant production of 434-million tons in 2011/12 and shortages at thermal power plants, CIL’s pithead stocks increased to 70-million tons primarily owing to shortages in availability of railway rakes. Against a requirement of 200 railway rakes daily, the miner received 180 rakes a day from government-owned and -operated Indian Railways.

CIL last week approved an investment of $1.36-billion to develop railway track and related infrastructure in three coal-producing provinces, namely Jharkhand, Chhattisgarh and Orissa, to evacuate coal from mines. The investment would be completed over the next three years and enable additional evacuation of 100-million tons a year of coal from each of these provinces.

Though this would partially mitigate the problem of mounting stocks at pitheads, transportation of imported coal from ports to consumption centers would require far higher investments if long-term coal importation projections were to be made feasible, the official said.

Edited by: Esmarie Swanepoel


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