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Saturday, February 25, 2012

Coal shortage to hit power capacity plans in India

Saturday, 25 Feb 2012

Business Line reported that the Indian power ministry, in its report to the Planning Commission, has informed that coal availability and capacity addition during the XII Plan paints a very very bleak scenario raising questions about achieving 9% growth during 2012-17.

With Coal India Limited production projected to be around 615 million tonnes against the XII Plan requirement of 842 million tonnes, the situation is likely to be very bad.

A note submitted to the Planning Commission states that “It may be noted that the availability of coal, as indicated by CIL, would support only about 19,000 MW of CIL linked new capacity during the XII Plan, as against 38,000 MW required. Accordingly, the XII Plan target of 76,000 MW would need to be scaled down to about 57,000 MW.”

To sustain capacity addition of 76,000 MW proposed in the XII Plan, fuel availability and related concerns need to be ensured. By the end of the XII Plan, the coal requirement would be around 842 million tonnes against the availability through linkage of around 450 million tonnes, coal blocks 100 million tonnes and imported coal 54 million tonnes. In addition to this, power utilities are likely to import 159 million tonnes to bridge the shortfall of 238 million tonnes.

The note states that credit exposure limit of banks and IFCs to the power sector is almost close to the breaching limit. It also points to mismatch in debt tenor (15 years) and cash flows (over 25 years). This issue is further complicated by the absence of uniform land acquisition policy that has held up a large number of projects coupled with delays in according environmental clearances to power projects/captive coal blocks. There is also the issue of poor financial health of distribution companies.

The total capacity addition during the XII Plan has been proposed at around 76,000 MW which will roughly comprise 62,695 MW based on coal fed projects, 2,800 MW of nuclear power, 9,200 MW of hydro power and 1,086 MW of gas based power.

(Sourced from BL)

2 comments:

Coal said...

The investment into alternative power generating technologies such as nuclear energy may need to be measured against the potential cost when things turn against you as unfortunately happened this year in Japan. Coal prices and coal statistics show developing economies are more likely to increase their investment into & their use of coal mining in coming years because of coal's affordability and ability to quickly meet increasing demands for electricity and steel. www.coalportal.com

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