Coal India Targets 615 Million Tons in 2017 -- Blue Sky for Power Sector?

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Written by Richard Finlayson, Senior I international Editor for Industrial Info Resources (Sugar Land, Texas)--With current coal supplies from Coal India Limited providing for only 60% of the power sector's fuel needs, the company has proposed increasing output to 615 million tons in the year 2016-17 from the 435.8 million tons produced in 2011-12, which missed the revised target of 447 million tons. The production target for 2013 is 468.7 million tons.

In an official statement, the company said that it had identified 56 "spill over" projects from the 11th Plan (2007-12), plus 69 new projects to increase production during the 12th Plan (2012-17). The 615 million-ton target for the final year of the 12th Plan assumes that regulatory obstacles that currently impede the expansion of production would be removed. These would include the requisite clearances, environmental and forest clearances, land acquisition, law and order issues, and product evacuation.

The central government appears to be willing to begin to attack the regulatory obstacles and clear approvals for new power projects, which have been pending for some time. It also has set norms for coal block allocations to power projects.

The Coal Ministry said in a letter to chief secretaries of all states that there would be three categories/models for allocation. The grant of mines to companies for specified end uses other than power shall be done by auction through a competitive bidding process. Government companies also can participate in the process, though allotment to government companies for end use also can be made under the government dispensation route. The identified blocks earmarked for allocation to the power sector would be earmarked to the Ministry of Power or the state government to carry out the tariff-based bidding.

The allotment would be done to mining and mineral development companies in states for commercial mining on a fuel supply agreement and coal linkage basis.

There still appears to be plenty of room for centralized bureaucracy and demarcation disputes.

Promises for the end year of the 12th Plan and revised allocation schemes will not impress power industry executives like Arup Roy Choudbury, chairman of state-controlled National Thermal Power Company (NTPC), who says they will miss their target of adding 25,000 MW of capacity by 2017 and have revised the target to 14,500 MW, in line with coal supply expectations. More than 80% of the total 76,000 MW of additional capacity planned for 2012-17 is coal fired, and "spill over" from projects from the 11th plan could be the basis for targets missed in the 12th plan. It has happened before, as Choudbury well knows.

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