Capacity addition in India’s electricity sector in the 12th Plan (2012-17) runs the risk of getting derailed because of uncertain domestic availability and volatile international prices of coal, unless immediate reforms are undertaken to augment coal supply.
The alarm has been raised by a paper by industry chamber Ficci and consultant in energy sector ICF.
The paper asks for allowing captive mines to sell surplus coal at market prices to incentivise additional production and full-scale commercial mining at market prices through amendment in the Mines And Minerals (Development And Regulation) Act.
To meet its growing demand, the approach paper of 12th Plan targets to set up 100 Gw of capacity. However, domestic fuel shortages, financially precarious condition of distribution utilities and the issues around competitive power procurement process have emerged as a challenge.
Also, the issue of adequate coal linkage to power projects has assumed critical importance as nearly 25,000 Mw of thermal power capacity is presently stranded.
“It is heartening to note that the 12th Plan envisions about 50% share from private sector in capacity addition. However, unless fuel sector reforms keep pace with power sector reforms, India’s growth story could be jeopardised,” Ficci secretary general Rajiv Kumar said.
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According to Nitin Zamre, managing director, ICF International, India, the financial health of utilities and domestic fuel availability have emerged as the two most critical issues for the Indian power sector today.
“Immediate resolution of these issues with an eye on long term benefits is the need of the hour if we are able to realise India’s growth potential in the 12th Plan,” he said.
Immediate steps need to be taken to move towards commercially operating utilities and a competitive domestic fuel market, Zamre added.