Role of captive coal producers in India

Monday, 13 Feb 2012

Business standard reported that with Indian prime minister Dr Manmohan Singh’s office working on urgent measures to address the ‘coal crisis’, the private power industry’s hue and cry over the issue seems to have subsided for now.

Experts, however, said that private developers have no right to complain, as they have failed to develop their own captive coal reserves over the past two decades.

As per report, the private sector accounts for a bulk of the dip in production. Of the 208 captive coal blocks allotted since 1993, with a whopping 49 billion tonnes of reserves and a production potential of 657 million tonne per year (a notch less than India’s annual coal demand), the estimated production is a dismal 37 million tonnes per year from only 27 captive blocks the private sector has been able to commission so far.

Mr Amrit Pandurangi senior director at accounting and consultancy firm Deloitte Touche Tohmatsu Ltd said that “While there is no denying CIL’s production has come down, the private sector has also failed to increase production to expected levels. This might be related to delayed clearances in some cases. But the private sector’s tendency to grab blocks and continue to sit over them for long is also to be blamed.”

The private sector does not agree that delays in developing captive blocks have played a major role in augmenting the shortages, and attributes the slump to unavailability of linkage coal. Mr Ashok Khurana director general of the Association of Power Producers said that “Captive blocks have been delayed because of land and environment clearance issues. The nation lost over two years because of the ‘no-go’ policy. CIL’s production has stagnated.”

The power sector’s requirement of coal in the current financial year is estimated at 470 million tonne. The sector is likely to suffer an overall shortage of 70 million tonne.

(Sourced from BS)