Coal mining

Why does India face frequent power shortages despite having sufficient coal reserves? s – Business Standard

India has the fourth largest coal reserves in the world. It is the second largest producer of fossil fuels after China and home to the world’s largest coal mine, Coal India, which accounts for 80% of the country’s GDP.

The minable capacity of coal blocks already allocated is about 15% to 20% higher than the projected demand in 2030.

So why do power plants in India, year after year, face coal shortages that lead to widespread blackouts, leaving parts of the country in the dark and industries in limbo. There are several factors.

India has a long-standing policy to reduce coal imports. In February 2020, Coal Minister Pralhad Joshi said the country would stop importing thermal coal from 2023-24.

Joshi said the Ministry of Coal will coordinate with the Ministry of Railways and Shipping and enable Coal India, captive and commercial miners to clear more coal by 2030.

But despite efforts to increase the supply of domestic coal, there was a gap between the demand for coal and its supply. Coal stocks in power plants are depleting at an alarming rate. Now, the Department of Energy is blaming a decline in coal imports for the current crisis. In 2018-2019, 21.4 million tons of coal were imported for blending, 23.8 million tons in 2019-20, and in 2021-22, it decreased to 8.3 million tons.

Coal stocks at power plants have fallen about 13% since April to their lowest pre-summer levels in years. For the first time since 2015, Coal India will import the fuel for use by state and private power generation companies.

The Ministry of Electricity said the decision was taken after almost all states indicated that multiple tenders for coal imports by states would lead to confusion and seek centralized procurement through Coal India.

The center faced opposition from countries because imported charcoal is five times more expensive than domestically imported charcoal.

Recently, the government has also stepped up pressure on utilities to increase imports to keep pace with domestic coal.

It even warned against reducing the supply of domestically mined coal if power plants did not accumulate coal stocks through imports. But the Ministry of Electricity on Saturday asked countries to suspend tenders “in progress”.

Despite record production, Indian coal supply has not been able to meet demand.

In April 2022, the company recorded a growth of 27.64% with a production of 53.47 million tons.

Former Coal Minister Anil Swarup told The Washington Post that Coal India’s production has stagnated in the past few years due to the government’s failure to appoint top management and fund mining expansions.

Shriya Jay business standard points in the morningThe contradiction between the ministries of coal, electricity and railways. Energy units were not stockpiled when Coal India had a surplus of coal. Imported coal-based power units have not been operating for several years. Mining and coal supply pressure falls on Coal India only.

Coal production in India has grown more slowly than captive mines, which have been granted over the past six years. During the 2020-22 period, production from captive mines jumped 38.5% while CIL saw tepid growth of 3.4%, according to government data.

These captive mines have been awarded to private companies and state-owned facilities for the past five years after the Supreme Court in 2014 struck down all coal block allotments made over the past two decades.

Last year, three tranches of coal auctions were held after a two-year hiatus and nine lots were successfully awarded

In September 2021, the Union Coal Ministry issued a stern warning to owners of captive coal blocks, saying their mines must ramp up production or face regulations in coal supply from CIL.

The ministry noted that production from these mines was less than the target.

Among the 43 operational coal mines awarded to private companies in the power, steel and metals sectors, none meet the annual production target.

On May 6, Coal India said it would offer 20 closed, closed underground coal mines to the private sector to reopen and bring them into production on a revenue-sharing model.

Shriya Jai ​​says The current power supply chain appears unprepared to handle the high growth period, sTate’s annoyances are unable to push the gencos, but eShe said the lectures’ supply chain needs fixing starting with case inconveniences.

Meanwhile, railways are struggling to balance demands from the thermal power industry for faster coal supplies with those of other industries. They must keep the presses ready to meet the growing demand for almost every other commodity, from cement and steel to sand and food grains.

Strained balance sheets in turmoil have consistently caused payments to energy producers to be delayed, often affecting cash flows and discouraging further investment in the electricity generation sector.

For the second time in two years, the Union’s Energy Ministry has notified the Union of a scheme of unrest to defer payments to the electricity generation companies. With the disturbance receivables reaching a record high of 1 trillion rupees, the ministry has proposed a scheme to liquidate the disturbance receivables in 48 monthly instalments.

Strengthening the value chain of the energy sector will ensure that the mismatch between coal supply and demand is resolved in the long term.


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