India's Coal Minster Asks Power Minister to Freeze Power Projects' Coal Linkages

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--India's coal minister has asked the power minister to freeze the capacity of coal-based power projects at 63,450 megawatts (MW) and to stop presenting fresh projects for new coal linkages in the next five years. Earlier, India's state-owned National Thermal Power Company (NTPC) reported that adequate availability of coal could have helped the company to produce 10% to 15% more electricity annually from its 36,014 capacity.

In January, Coal Minister Sripakash Jaiwal Shinde said in a letter that Coal India Limited (CIL) and its subsidiaries had so far issued 171 letters of assurance for ensuring fuel supply to power projects, for a total capacity of 96,178 MW. The minister has categorically stated his inability to supply more that 450 million tons over the next five years though 2016-17, which will see the beginning of the last year of the 12th Five-Year Plan (2012-17).

Imports are being used by CIL to bridge the shortfall as it struggles to secure supplies of only 50% of the usual requirements of the power projects. CIL's ability to import enough coal has been hindered by the fact that exporters do not wish to be locked into long-term contracts.

The Coal Ministry is considering the reduction in the contracted quantity of projects already commissioned to 90% and will supply the balance to other supply-constructed utilities. This could involve power utilities commissioned before March 2009 coming under the rationing rules.

Out of the 96,187 MW of capacity for which letters of assurance have been issued, only 65,450 MW is expected to go on stream by 2016-17, and the balance probably will not make into operation, according to a projection by the Central Electricity Authority.

Concerned that any intrusion on the total by projects from the balance figure could render the whole exercise meaningless, even after freezing projected capacity, the minster has requested that concerned authorities be advised to finalize the list and freeze it.

The prime minister's office has reviewed the progress in streamlining coal supply in a meeting with key ministries. A broad consensus was reached on pegging the trigger level at minimum supplies of 80% against assurance given by CIL. More meetings are expected in the near future.

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