Wants to utilise huge pile-up of fuel stocks in Coal India’s mines.
The power ministry is planning to make a case for temporarily stopping spot sale of coal on e-auction and utilising the huge pile-up of fuel stocks in Coal India’s mines, during the high-level meeting with the prime minister on June 7. The meeting will discuss the issue of coal shortages. The ministry is unhappy with the adverse impact of the shortfall on electricity generation and capacity addition.
“We will request the prime minister to see that the coal requirement for thermal power stations are met. We have already suggested stoppage of e-auction and liquidate pithead stocks as temporary measures. These will be taken up for discussions at the meeting,” said a senior ministry official who did not wish to be identified.
The high-level meeting to be chaired by Manmohan Singh would be attended by ministers in charge of coal, power and finance. The meeting, which was originally to be held on May 16, would also be attended by Planning Commission Deputy Chairman Montek Singh Ahluwalia.
“The meeting will review progress in the power and coal sectors in the past four years and in the current financial year,” the official said. Coal Minister Sriprakash Jaiswal had earlier this month said the prime minister had expressed grave concern over the issues plaguing the sectors.
As an indication of the urgency of dealing with the ongoing coal shortages, the power ministry had recently told a 10-member group of ministers (GoM) on coal, headed by Finance Minister Pranab Mukherjee, that the sudden reduction in coal availability by Coal India will result in stranded power capacity of 24,000 Mw. This constitutes 44 per cent of the current Plan period’s likely capacity addition of 55,000 Mw.
Coal India sold 11.6 per cent or 45.7 million tonnes (mt) of its production of 431 mt through e-auction at an average price of Rs 1,582 per tonne in 2009-10. Price being realised at the auction is currently around 70 per cent over the notified price which varies from Rs 800-Rs 1,200 per tonne. The company allotted raw coal worth Rs 7,238 through e-auction in 2009-10, around 16 per cent of its total sales.
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Maharatna PSU’s chairman N C Jha had recently told Business Standard that pithead stocks of over 70 mt have been piled up in its mines primarily owing to limited availability of railway rakes.
“Plants of 5,593 Mw capacity commissioned in 2009-10 will operate at 42 per cent plant load factor (PLF). Plants of 6,911 Mw capacity commissioned in 2010-11 will not operate. Also, plants of 10,070 Mw capacity to be commissioned in 2011-12 will not operate as they will have no coal,” the ministry stated in a note prepared for the GoM.
Coal is a critical input for industries operating in major infrastructure sectors of power, steel and cement. Issues regarding environment clearances and land allocation coupled with the capacity constraints of the state-owned Coal India Ltd (CIL) ensured nil growth in the miner production at 431 mt in the last financial year.
The government had originally estimated a shortage in coal availability to the tune of 83 mt for the current financial as against a demand of 713 mt from consumers. Latest estimates suggest that this shortage is likely to cross 112 mt by March 2012 which will be met through imports.
The coal ministry admits that the environment ministry’s controversial no-go policy notified last year is a major reason for the problem. Coal India has committed a dismal 331 mt of supply for the power sector in 2011-12 against a demand of 426 mt. The balance 63 mt would be met through imports.