Coal news and updates

While the Government of India has demonstrated an unequivocal commitment to the growth of renewable sector, the travails of the thermal power sector seem to be getting worse. The thermal power sector as of now contributes nearly 70% of the nation’s aggregate capacity of 310,000 MW and is likely to grow further by another 50,000 MW during the next 5 years. Ironically, over 20,000 MW of the already commissioned thermal capacity set up with an investment of Rs. 150000 crores is beleaguered as there are either no takers for their power or they don't have assured supply of coal for their operation.

Much of the 100,000 MW of thermal capacity that came up during the last 10 years was from the private sector, which feels misled and disillusioned by the Government’s apathy towards their plight. The thermal power assets have ended up being NPAs causing great distress to the private investors as well as their financiers--the Banks and Private equity firms. The Government’s indifference towards such power plants would deeply hurt the private sector’s confidence for future investments which has already witnessed low investments during the last two years. Nobody grudges GOI’s gung-ho support for the renewable sector but it should not be at the cost of ignoring the coal based projects which form the backbone of the country’s power generation.

 

The Government should also reflect over their decision to continue with further investment in coal based projects through NTPC and SEBs when the already installed capacity is sitting idle. It is time for us to take an objective view of the energy sector and frame a pragmatic policy for the power generation sector. India has long miles to go before we claim that we have surplus power capacity. China’s per capita consumption is 3750 units/year --3 times as much as India. China’s installed generation capacity is about 1.5 million MW compared to India’s mere 0.31 million MW. The claim of India’s generation capacity being surplus is untrue and misplaced.

 

The present low demand for power is due to our own internal limitations, disconnects and inadequacy of the delivery systems. Parts of India even till today go without power for most of the day and most days of the year. We should take a bold and honest view of the present situation and make amends to our power generation and distribution policies. The present GOI for the first time since independence has taken bold initiatives but they need to do a lot more with a sense of urgency for the sustainability of India’s energy sector.

 

There are multiple recommendations the government of India may follow while formulating their future strategy for the sector. The government must stimulate power demand by rationalizing the present tariffs in which the bulk and power intensive industrial and commercial users have to pay punitive tariffs. Instead, large users should be incentivized with reduced tariffs and thus encourage to undertake further growth of their businesses.

Source: Energy ET