Naturally, this hokum comes with inbuilt solutions: the immediate relaxation of green norms to step up coal mining, increased pressure on CIL to step up production, and the opening up of coal mining to the private sector, not just for captive coal, as is currently the case, but outright commercial mining.
But as many have found (including in these pages), the official narrative doesn't entirely stand the test of scrutiny. What we appear to have instead is a sort of self-created crisis, the result of a lack of internal cohesion and regulatory collapse that stretches back to the salad days of United Progressive Alliance (UPA)-I. When the 11th Plan proposed an increase in power capacity by a modest 78,000 Mw, it's fairly clear that CIL, which was growing at (by its standard robust) eight per cent, didn't get the memo. Prayas, the Pune-based energy advocacy group, has done an excellent job of compiling CIL's repeated and on-record objections that they simply did not have the output to meet the new ramped-up demand. Here is an characteristically feeble CIL protestation from a 2008 inter-ministry meeting: "CIL is already having a commitment much beyond the projected level of production during the 11th Plan... consider this aspect while considering issue of new LoA's" (letters of agreement for coal supply). And yet, despite the absence of assured fuel supplies, the government pressed ahead; so did private players funded by banks at a promoter-friendly debt-to-equity ratio of 80-20. The current debt of the power sector is estimated at roughly Rs 3 lakh crore.
One only has to visit northern Chhattisgarh, as we did last week, to witness the folly-strewn landscape of India's power El Dorado gone wrong. In just four districts, Korba, Raigarh, Janjgir and Sarguja, MoUs were signed for 64 thermal projects, amounting to approximately 50,000 Mw. Of the lot, only 10,000 Mw has come online. The rest are half-built, or in some cases, limited to a signboard stuck on a vacant plot.
R V Shahi, who was power secretary at the time, accepted that "there may be some developers who were not that capable financially and who erred on the very high side of exposure... but there are other factors that are responsible for this problem." What are those factors? "If go, no-go was not there, things would have been different." It has, of course, been vigorously argued by Ramesh that a no-go impacted only about 15 to 20 per cent of the 600 virgin coal blocks proposed for extraction. The activist Sudiep Srivastava has calculated that the go areas alone contain 155,000 million tonnes (mt) of extractable coal, which even assuming a quadrupling of coal demand, can meet India's needs for 60 to 70 years. The energy oracles have countered this by pointing to Ramesh's less reported, but in their view, more lethal blow: the imposition in 2010 of the Comprehensive Environmental Pollution Index, or CEPI, in seven critical coal producing areas, cited as the real reason for the dramatic drop in coal production. There is a technical quibble over whether CIL's falling output had less to do with CEPI and more with the coal public sector undertaking's erratic production record, a debate for elsewhere. As, it appears, is the debate over how else areas deemed critically polluted by an IIT study ought to be designated.
Regardless, even if Ramesh was somewhat over-enthusiastic (clearly, he didn't get the memo either), the exaggerations of the negative impact of green activism on the energy sector allowed for a backlash which, rather than strive for a balance, has tilted the emphasis heavily in favour of industry. It hardly needs bear reminding that this overcompensation began in the UPA's tenure. When we met him last week, M Veerappa Moily, the last of the UPA's "cooperative" environment ministers, had gone as far as to prepare a note that summarises the number of projects cleared under his watch (140).
Meanwhile, another latter-day UPA invention, the Cabinet Secretariat's Project Monitoring Group claims to have enabled 72,000 Mw of power projects get environmental clearances. Their latest breakthrough is to have helped secure forest clearances for three railway lines, meant to evacuate 250 mt of coal from the forested interiors of Chhattisgarh, Odisha and Jharkhand.
Expectations that our new eco-sensitive government is critically evaluating UPA-era mythologies surrounding the coal/power crisis remain scarce. One of the first steps of the new environment minister is to remove CEPI from the Singrauli coal mining belt in central India (by the time UPA left office, CEPI was in force in only two out of seven "critically polluted" areas). Meanwhile, the advisory council set up to, well, advise the merged ministries of coal and power contains Shahi, the erstwhile power secretary quoted earlier and Partha Bhattacharya, the former chief of CIL during the torrid years of the 11th Plan. Needless to say, both these former adversaries are now united in vigorously advocating the brisk passage of long-stalled legislation, which will allow the entry of private sector into coal mining, ending CIL's monopoly.
The only remaining stakeholder left out of the current regime's reassembling of the cast of the great folly of 2008 is a debt-ridden promoter. This too might be remedied. Lagadapati Rajagopal, the pepper-spraying former Congress MP and the founder of Lanco Group (stalled projects of around 5,500 Mw ), is apparently being wooed by the Bharatiya Janata Party. His inner circle is abuzz with the promise that the Seemandhra stalwart is being offered a lieutenant governorship. But Rajagopal says he is more focused on improving Lanco's worrisome balance sheets, currently in debt of Rs 30,000 crore in just power alone. Of this, the banks have already disbursed Rs 10,000 crore. Unfazed, Rajagopal says the power producers association, which held a meeting with the new minister where lenders were also present, has asked for a further dilution of the debt-to-equity ratio from 80-20 down to 90 (banks)-10 (promoter). Isn't that imprudent, I offered. He said in "today's environment, it is the only way to get investors interested". He refused to specify if the banks were impressed by this formulation, only that the meeting "went off very well".
Who says continuity is only limited to foreign policy?
The writer anchors the ground reportage show Truth vs Hype on NDTV 24X7