Coal news and updates

The government’s policy think-tank NITI Aayog has decided to break up the seven subsidiaries of Coal India Limited (CIL) after stalling it for past two years.

 

NITI Aayog suggested coal mining should be based on competition leading to the determination of the fossil fuel’s market price.

 

It is part of the National Energy Plan which NITI Ayyog is going to finalise by July. The plan, to be finalised after consultation with all the stakeholders, will be a roadmap for energy security up to 2040.

 

In a meeting with Prime Minister Narendra Modi on May 13, Niti Aayog had suggested the unbundling of Coal India subsidiaries since there was an absence of coal market in India and the cost of pass-through electricity tariff was making coal mining inefficient.

 

According to former power secretary Uma Shankar, this policy change would result into competition between companies in terms of pricing. "The pricing of coal by public sector companies was not very transparent," he said .

 

Previously, there was a plan to constitute a coal regulatory body which would stabilise the price companies can charge and increase transparency. Since that plan did not materialise, creating competition among companies might bring the coal price down, Shankar said.

 

However, Ashok Khurana, Director General of Association of Power Producers, does not expect it to be via an auction method. He welcomed the move to split Coal India, calling it a “positive and viable option.”

 

“All public sector and state units are being given coal on nomination basis. There it is cost-plus. We need to move away from cost plus in coal and power sector,” Khurana said.

 

The Union government-owned Coal India, with its seven subsidiaries, produces around 80 percent of total coal mined in India.

 

“The dominating [in coal production] is the public and state sector. Till date no central unit has ever taken part in bidding for coal or power. It is an uneven playing field,” Khurana added.

 

Although the move to introduce competition in the coal market might bring down the power tariff, Khurana said, "the splitting of the coal companies will take at least one year time."

 

Buying coal from e-auction was going to be more expensive than linkage price, he noted.

 

NITI Aayog also advocated that stranded gas-based projects should be considered for balancing grid with a feasible tariff as gas is a cleaner fuel. About 24,000 megawatt is stranded due to unavailability of gas in the power sector.  (CNBC)

 

Khurana explained, “We only have 25,000 megawatt of gas. If we are able to get the renewables on board as planned, to a 100 gigawatt, need the entire gas-based plant for grid balance. The prices can be reduced by taxes, but grid balancing cost is socialized to everyone. Because of the variability and intermittency of the renewables, you need at least 10-20% lying with the low dispatch centre to manage this variability. The gas is the optimal source of grid balancing and the storage of hydro.”

 

The think tank has also batted for tax on gas to be lowered because presently the tax is higher than oil’s.

 

Apart from the Coal India split, NITI Aayog has highlighted the need to improve the financial and operational health of discoms as government’s schemes, such as rural electrification, are dependent on it.

 

Regarding nuclear energy, Aayog has underlined the need to increase the production of Uranium and thus, increase nuclear energy usage.

 

Ministries are holding discussions to bring about long-term energy policy. The policy would ensure a right approach to supply future energy demand with optimized mix of resources.

 

Source: Money Control