In a move aimed at unlocking ‘dead investments’ in the power sector, the Government is in the process of finalising a plan where adequate quantity of coal will be provided to thermal plants which are to be commissioned during the current fiscal as well as in 2015-16. Plans are afoot to ensure that by the time these plants are commissioned, there is adequate supply of coal for them, so that they don’t face any demand-supply crisis.
The move is in sync with the announcements made by Finance Minister Arun Jaitley in the Union Budget on July 10, where he had promised that sufficient amount of coal will be given to power plants which have already been commissioned or those which would be commissioned by March 2015.
Subsequently, within three weeks of the Budget having been presented by the NDA Government, the Power Ministry, according to sources aware of the development, is learnt to have begun calculations regarding the actual requirement of coal for thermal plants which are to be commissioned during the current financial year 2014-15. In fact in ambitious move, the ministry has also included into its ambit the plants which are to come up in the next fiscal, i.e. 2015-16.
Sources added that though the entire process is at a preliminary stage, Coal India ltd (CIl) will also be involved in it, as already Power and Coal Minister Piyush Goyal has asked the State-owned Maharatna company to try and take its production capacity to up to 30 per cent. CIl’s current annual production capacity is at around 9 per cent.
Taking into consideration the actual number of thermal power plants which may be commissioned during the current fiscal as well as in FY16, CIl is likely to be asked to augment its production in such a way so that these plants don’t face any shortage of the fossil fuel at the time of their commissioning.
Under the 12th Five Year Plan, 72,340 mw of thermal plants are to be commissioned. Out of these till June 2014, 40,919 mw of thermal power plants have been added across the country.
Though CIl sources said that taking the production capacity to up to 30 per cent is an ambitious target, industry experts said that it will take around four to five years for the company to do so.
Inadequate supply of coal to thermal plants is an issue which is directly related to slow environmental clearances to most of the CIl projects. As these projects are currently being cleared on a case to case basis, which is a long drawn process, its impact is being seen on the production of CIl. Owing to this, the supply of coal to thermal plants is being affected.
The new NDA Government though is trying to make all the right noises and Goyal also claims ‘great synergy’ with his ministerial colleagues in the Mines and Environment Ministries, sources in the know said that it will be some time till coal supply to thermal plants will be absolutely 100 per cent.
Meanwhile the Power Ministry’s plan seems clearly inspired by the intent shown by Jaitley shown in the Union Budget for the coal sector.
Jaitley had in his Budget speech, said that stringent mechanisms like quality control and environmental protection will be taken to ensure adequate supply of coal to power plants. For this, more washeries will be set up and rationalisation of coal linkages will be exercised through optimising transport of the dry fuel. This, in turn, will also reduce cost of power, the Finance Minister had said.