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Energy & Power

12 Nov, 2013 17:13 IST

India Inc. Moots PPP For Coal Sector

Coal remains mainstay in energy’s back-bone with over 57% share in power generation


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ONGC's Flat Profit Worries As Growth Financing Eyed Government May Allow Doubling Of KG-D6 Gas Price SC Dismisses Essar Oil's Plea On Tax Dues Indian industry is seeking increased public private partnerships (PPP) for re-energising domestic coal production and wants the government to find ways to meet the current and future demand for coal, instead of delving in the past.

The demand comes at a time when coal availability and India's energy security has been very uncertain since the unearthing of the coal scam close to two years ago.

An industry sponsored knowledge paper, released at an event organised by apex association Ficci on Monday, 11 November, emphasised the need for PPP model in coal mining and production, and called for the use of inland waterways for transportation of coal. Additional fuel rakes for freight transportation and expeditious land and environmental clearances were also sought.

Speaking on the occasion, SK Srivastava, secretary, Ministry of Coal, said that the main factors not taken into account when blaming coal production in India. According to him, the high population density of the country and the fact that majority of the coal reserves, limited to 7-8 states, are located under forest cover or populated areas are the real reasons why India fails to utilise its ample reserves. “Given the limitations in the sector the real question is about our ability to extract any coal at all”, he said.

Srivastava claimed that the government is working on all the suggestions made by the industry. Dedicated rail-lines from coal production to consumption centres in order to avoid supply chain inefficiencies related to coal transportation was another demand which is considered seriously.

In FY2013 cumulative coal production was 575.71 million tons - an increase of 7.4 per cent but against the projected demand of around 770 million tons, implies power producers will need to import coal over 130 million tons this year. Though growth is much better than the nominal 2-3 per cent growth over previous years it is way below the requirement. It is expected that aggregate coal demand is will increase to 980 million tons in 2017 and coupled with oil imports and other essential commodities, further increase in coal imports will put strain on the exchequer.

The recommendations assume greater significance as coal is and will continue to remain the mainstay in Indian energy’s back-bone with over 57 per cent share in power generation. The largest coal consumer remains the power sector at 74 per cent followed by steel and cement at a combined share of 11 per cent. The paper points out the need for India to look at a long term strategy and pointing out the time taken from the initial geological surveys to commencement of production in a coal block is typically around 10 years as opposed to between 6-7 years internationally. These long cycles discourage private sector investment and increase the risk considerably for everyone involved, said S. Ravishankar, Director Metis Energy Consulting.

While cautioning against drawing parallels with international coal scenarios Srivastava suggested increased coal production in the near future. He said MoC in consultation with Coal India, ministry of finance and Ministry of Environment is working on four aspects of coal mining environmental clearance, land acquisition, evacuation and extraction.

The discrepancies of coal block allocation were brought to light following the CAG report which in turn prompted the ongoing CBI investigations. Ever since India Inc feels coal - mainstay of India's energy - has become a hot potato with no official willing to sanction clearances or allocate new blocks. The scam and subsequent ban on mining as well as de-allocation of blocks had damaged businesses across the board.

The Ficci conference was meant to address the concerns surrounding the sector. The knowledge paper released at the event was produced in collaboration with Metis Energy Consulting.

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