Coal shortage may burn your pockets

Non-clearance of projects, import of fuel to jack up tariffs in states

The Ministry, in its note to the Group of Ministers (GoM) on coal headed by Finance Minister Pranab Mukherjee said that due to poor supply of coal from Coal India Limited (CIL), power generating units are forced to depend on costly imported coal.  

As the coal prices are rising in the international market, several states have informed the Power Ministry that they have to increase the power tariffs against the price fixed by the State Electricity Regulatory Commissions, sources in the Ministry told Deccan Herald.

Besides, some of the states have urged the Ministry to relay upon the Coal Ministry to augment production from domestic coal mines to avoid importing coal due to hefty price.

Coal imports have gone up to 23.2 million tonnes (MT) in 2009-10 as against 16 MT in 2008-09. As per the data available with the Ministry in 2010-11 (April to December), power generating companies have suffered generation loss of about 5.3 billion units due to scarcity of dry fuel. 

The non-clearance of coal mining projects by the Ministry of Environment and Forests (MoEF) has also been brought to the notice of the GoM.

Around 190 coal mining projects are stuck due to restriction imposed by the MoEF in the country. The power ministry warned that deficit of coal will aggravate further in 2011-12 due to poor availability of domestic coal.

Augmenting shortfall

India is facing a shortfall of around 83 million tonnes in the current financial year, which is set to increase to 142 million tonnes in 2011-12.

The country’s coal production was projected at 554 million tonnes in 2011-12 against the demand of 696 million tonnes.

The shortfall will have to be met through import only said the sources.
India’s coal shortage is likely to worsen in the next two years up to 200 million tonnes due to rising demand from industrial as well as power sectors and stagnating production from local resources, sources said.

Another rude shock to power producing companies was that the state-run CIL, which accounts for over 80 per cent of the domestic coal production through its seven subsidiaries, has decided to increase its prices by about 15 per cent with effect from Saturday midnight. The hike will bring some parity between domestic and international prices. CIL, the world’s largest coal producer, had last raised the fossil fuel price in October 2009.