India’s coal story has two major protagonists — the Ministries of Coal and Power — and their tu tu mein mein (or squabbles), while all the customers want is smooth supply of electricity.
While the power sector says domestic supply is an issue and, therefore, need to import during peak demand, the public sector giant, Coal India, says supply is not an issue. So where is the problem?
On August 25, the Ministry of Coal stated that its dedication to sustaining an uninterrupted supply of coal remains steadfast.
The overall coal stock position — at mines, thermal power plants (TPPs), etc. — as on August 23 reached 88.01 million tonne, indicating a substantial increase of 24.7 per cent from the 70.61 million tonne a year ago. This higher coal stock position indicates commitment to maintaining an ample supply of coal, the ministry said.
Meanwhile, recent reports have suggested that the Ministry of Power is expected to direct TPPs to continue importing coal for blending with domestic supplies by a month till October. In January, the ministry had directed Central/State power generation companies and independent power producers to take necessary action and plan the import of coal through transparent competitive procurement for blending — at the rate of 6 per cent by weight — so as to have sufficient stocks at their power plants for smooth operations till September 2023.
According to the Power Ministry, the peak power demand reached a record high of 239.978 GW as on September 1. The sudden rise in demand was met by taking several proactive measures, it said.
As per reports, the power sector imported 14.21 million tonne of coal during the April-June quarter in FY24, which is 13 per cent lower than the quantity imported a year ago. According to reports, as India’s peak power demand broke all past records during August, the domestic coal-based power plants are facing shortage of coal, which in the first 21 days of the month has already surpassed 4.43 million tonne.
So what is the correct position on domestic supply?
According to a senior official in Coal India Ltd, “There is no shortage of domestic coal. Stock at domestic coal based power plants was at 29.2 million tonne (August 26), which was 5.4 per cent more than on the same date last year. Even as the power demand took up a sudden spike in August this year, Coal India’s progressive supply to the power sector at 240.6 million tonne this fiscal (August 26) is 3 per cent more than in the same period last year. The company is on course to meet the projected demand of domestic coal from the power sector,” the official said.
Then why the argument year after year on coal supply, one wonders.
PM Prasad, Chairman, Coal India, said “With sufficient domestic stock available with Coal India to meet the power sector’s demand we do not foresee any crisis as such. The highly volatile nature of power demand makes it difficult to predict future scenario. But, we are geared up to handle any surge in demand with adequate stock at our pitheads and increased production.”
Coal India’s production is set to grow at 11 per cent. Whereas, the power sector’s demand for the PSU giant’s coal in the current fiscal is pegged to grow at only at 4 per cent over last year.
“Our pithead stock (as of August 24) at nearly 47 million tonne is higher by 48 per cent, or 15 million tonne, than that on the same date of last year. Coal stock at domestic coal based power plants, where the bulk of the supplies are met by CIL, is at 28.5 million tonne (as of August 22),” he said.
Further, a total inventory of about 11 million tonne is available for domestic coal-based plants at goods sheds, private washeries, captive mines and ports, including rakes on rail. This makes a total of around 87 million tonne of coal available in the circuit.
“With increased output from CIL in the coming months there is no cause for concern,” Prasad said.
The future of coal
While the war of words between the Ministries of Power and Coal continues, another debate is happening around whether coal itself will become passe.
According to Prasad, “Coal will continue to be the dominant energy player least for the next two-decades. In percentage terms its share may shrink but in volume terms it will grow. NITI Aayog and independent international agencies estimate that coal’s use in India is set to peak by early to mid-2030s despite India growing fastest in renewable energy capacity among major economies of the world. What makes coal the preferred energy fuel is its affordability, abundance and availability.”
So if things are known, then what is the challenge? It all boils down to infrastructure. Steps have already been taken for the first-mile connectivity (FMC) — transportation of coal from pitheads to dispatch points. The Coal Ministry has already undertaken 55 FMC projects of 526 million tonne per annum capacity with an investment of ₹18,000 crore. Further, in January, the Ministry said that it will be taking up additional 19 FMC projects for Coal India and the Singareni Collieries Company Ltd with a capacity of 330 million tonne and these projects will be implemented by FY26-27.
To ensure efficient and environment-friendly coal evacuation in future, the Ministry is working on the development of a National Coal Logistic Plan including FMC through railway sidings near coal mines and strengthening of rail network in coalfields. The Ministry has formulated a strategy to develop an integrated approach for eliminating road transportation of coal in mines and has taken steps to upgrade mechanised coal transportation and loading system under FMC projects. Coal handling plants and silos with rapid loading systems will have benefits like crushing, sizing of coal and speedy computer-aided loading.
The issue can be easily sorted out if the two ministries sit across the table — which they anyway do — and share the same narrative.