D-Sector for Development Community

   Friday, October 19, 2018
Agriculture - Duties and Rights - Education - Environment - Food - Global - Governance - Health - Indian Economy - Indian Society - Physical Development - Social Welfare - Water and Sanitation
Print | Back
Dark clouds over coal based power
By Shankar Sharma

As supply of coal is becoming uncertain, the future of many coal-based power plants has come under clouds. However, this crisis could become an opportunity if focus is shifted to renewable energy options.


How reliable are coal based power plants considering supply side constraints?

There have been many news reports in recent weeks that a reliable coal supply has become a critical issue for the Indian power sector in recent years, and that because of it the power supply situation is likely to go from bad to worse. The issue has the potential to be a game changer.

The international coal prices are going up steeply, and the supply reliability is being hit very hard. So much so that Tata Power and Reliance Power, which are developing 4,000-MW ultra-mega power projects at Mundra (Gujarat) and Krishnapatnam (Andhra Pradesh) respectively, are reported to be have asked the Power Ministry to allow them to increase the tariffs of their projects as the imported coal sourced from Indonesia for these projects has become dearer. The construction works on the first one is reported to have stopped and the union government has turned down the request to intervene in renegotiating the contract price for the electricity from both these projects.

Many of the new power projects are being planned to be entirely dependent on imported coal. An increasing number of coal power projects, including few UMPPs and IPPs, are being forced to go for blending of domestic coal with 10 to 30% imported coal because of the domestic supply problems. NTPC is reported to be blending imported coal between 7 and 20 per cent across its various stations. According to industry estimates, in about five years, India could be forced to import almost 30 per cent of the total coal required by its power plants, compounding the worries for distribution utilities at large.

As per power sector analysts the Indian banks are at an increased risk of defaults on loans to companies linked to the power sector, as mounting losses in state electricity boards, costly coal and delays in execution of new power plants have made recovery difficult.

The coal supply from Australia, Indonesia and South Africa are expected to become costlier and/or difficult to source due to various domestic reasons in those countries. The unreliability associated with the import of coal was highlighted by the sinking of a coal carrying ship off the coast of Maharastra recently.

The price of domestic coal also increased recently due to Rs. 50 per ton of carbon tax imposed by the Union govt. The losses suffered by the country's distribution utilities, which are estimated to be around Rs 70,000 crore in 2010-11, will go up further due to increased coal prices unless suitable remedial measures are taken.

As per power sector analysts the Indian banks are at an increased risk of defaults on loans to companies linked to the power sector, as mounting losses in state electricity boards, costly coal and delays in execution of new power plants have made recovery difficult. Because of such a scenario banks/financial institutions are reported to have concerns in funding the coal power projects. JSW Energy is reported to have put its Ratnagiri (Maharastra) expansion plans on hold due to costly imported coal, which has already dented its profit. The company believes it would be wiser to defer the plan until there is some clarity on the issue of imported coal.

Despite concerted efforts by the union govt to dilute the existing environmental regulations to allow opening up of more coal mining, the coal supply situation is highly likely to go from bad to worse for a combination of reasons.

Even those coal power plants, which are relying on domestic coal, are facing highly unreliable supply. The Central Electricity Authority (CEA) reports indicate that during the last few years the loss of electricity production due to coal supply problems has been increasing. As per the Standing Committee of the Parliament on Energy, the shortage of coal is expected to impact new capacity addition plans to the tune of 15,000 MW in the current fiscal (2011-12). If NTPC, the high profile central govt undertaking, cannot ensure adequate coal supply to its plants, one can imagine the plight of other state owned/private companies. Karnataka's Raichur TPP has been known to be facing coal shortages for years. The proposals by Karnataka state govt to set up additional coal power plants are halted because of the lack of coal linkage.

In this background there should be no doubts that coal supply situation in the country has become a major problem. Despite concerted efforts by the union govt to dilute the existing environmental regulations to allow opening up of more coal mining, the coal supply situation is highly likely to go from bad to worse for a combination of reasons. Even some of those new coal mines, for which approvals have been accorded, have not got to the development stage due to various reasons. The coal ministry is reported to have withdrawn the allocation of 3 new coal blocks to a large public sector power company because the development of these coal mines was not undertaken within the stipulated period.

It is in this context that we have to consider the unbelievable rate of licenses being issued to set up additional coal power plants in the country. More than 150 coal power plants were reported to have been approved during 2010-11. The Power Ministry expects to see the capacity addition of over 80,000 MW in the 12th plan period (2012-17) at a rate of about 16,000 MW a year. Such a projection by the Power Ministry, and that by Integrated Energy Policy that the coal power capacity has to increase to about 400,000 MW by 2031-32 can be seen as unrealistic in this context. These projections seem to have been arrived at without considering the various constraints in achieving the targets and without due consideration to the social and environmental impacts on our society.

The overall cost to the society for its reliance on coal power is huge, and hence there is an urgent need to review the whole scenario. Our society should objectively consider many benign alternatives available to us to meet the legitimate demand for electricity.

To read more, click here:

The views expressed above are personal and do not necessarily reflect the views of d-sector editorial team.

Shankar Sharma  |  shankar.sharma2005@gmail.com

The author is a power policy analyst based in Shimoga district of Karnataka state. He remains passionate about renewable energy and environment.

Write to the Author  |  Write to d-sector  |  Editor's Note

 Other Articles in Physical Development
Corruption Watch

The bad news is that corruption has not only sustained but has grown in size and stature in the country. With scams being a regular feature, seventy per cent respondents in a survey have rightfully opined that corruption has continued to increase in India. One in every two interviewed admit having paid a bribe for availing public services during last one year. Transparency International's latest survey reveals that the political parties top the chart for the most corrupt public institutions, followed by police force and legislatures. No wonder, India continues to make new records on the global corruption arena!

The shocking revelation is that the health and education sectors haven't remained untouched by this phenomenon. With 5th and 6th positions respectively for these sectors on the public perception chart on corruption, corruption has crept insidiously into these sectors of hope for the masses. With bureaucracy being fourth in the list of corrupt institutions in the country, corruption seems to have been non-formally institutionalized with little hope if public services would ever be effective in the country. With economic growth having literally institutionalized corruption, are we now expecting corrupt to be socially responsible - a different CSR.

Poor. Who?

Not giving 'aid' to India is one thing but calling it 'rich' is quite another. If one in three of the world's malnourished children live in India, what does average daily income of $3 indicate? It perhaps means that there is a relative decline in poverty - people are 'less poor' than what they used to be in the past. But having crossed the World Bank arbitrary threshold of $2 a day does not absolve the 'developed' countries of their obligation to part with 0.7 per cent of their Gross National Income in development aid. Should this three-decade old figure not be revised?  

An interesting debate in UK's House of Commons delved on future of development assistance by the British Government. While prioritizing limited resources has been a concern, there has been no denying the fact that development aid must be guided towards tangible gains over a short period of time to start with. There are difficult choices for elected governments to make - should they invest in long-term primary education or in short-term university scholarships? Which of these will bring gains and trigger long-term transformation in the society. As politicians continue to be divided on the matter, poverty persists!!   

Lead View
People, Partition and the Pain
By Rina Mukherji
15 Aug 2013

Dr Jayanti Basu's book analyzes the complex feelings of hatred and longing for the homeland that have contributed to shaping the personalities of a generation of people who were forced to ..
Book Shelf

Yamuna Manifesto

A Journey in the Future of Water

Spoiling Tibet

On Western Terrorism
Devinder Sharma
Carmen Miranda
Pandurang Hegde
Sudhirendar Sharma
Member Login
- New Member
- Forgot Password

WoW Gold,Buy WoW Gold,Website Design,Web Design,Health Tips,Health Guides,NFL News,NFL Jerseys,Fashion Design,Home Design,Replica Handbags,Replica Bags,Jewelry Stores,Wedding Jewelry,WOW Gold,Cheap WoW Gold,Wedding Dresses,Evening Dresses,MMORPG Guides,MMORPG Tips,Fashion Jewelry,Fashion Crystal,Sexy Lingerie,Best Sexy Lingerie,Fashion Clothing,Fashion Shoes,Travel News,Travel Guides,Education News,Education Tips