|As the lights go out ...|
|Friday, 20 May 2011 00:00|
With 50 major power plants that account for roughly 40% of the country’s power production running on close to empty—according to CII, they have 4-7 days of coal stocks as compared to a 21-day norm—a fierce battle is raging between different ministries in the government, and may even drag in the Supreme Court. A meeting to resolve issues, to be chaired by the Prime Minister yesterday, had to be put off as some ministers played truant. The power ministry, which told a Group of Ministers 10 days ago that the sudden reduction in coal supplies from Coal India Limited (CIL) will result in stranded capacity of 24,000 MW, now wants CIL to stop auctioning a part of its production and instead give it to fuel-starved power plants. CIL, in turn, has said the e-auction principle, which applies to a tenth of its production, was based on a Supreme Court order and was part of a coal policy that was made in 2007 after consulting all ministries. In any case, the coal ministry says, stopping e-auctions won’t help. The real problem, the ministry avers, has to do with the inadequate supply of rakes by the railways—13% of what CIL produces, the ministry says, remains piled up at the mines as the railways don’t have enough wagons. And the lion’s share of the blame, it adds, has to rest with the environment ministry whose no-go policies have prevented it from doing more mining.
Whoever is to blame, what no one is denying is that supplies are woefully short of target—this year’s production is likely to be around 550 million tonnes against the projected output of 630 million tonnes. Theoretically, the balance can be made good through imports but, with a shortage of rakes, how do you transport this coal from the ports? And where do you import so much coal from anyway? Thanks to the railways’ policy of overcharging on coal transport, this raises power tariffs considerably—not passing them on to consumers, in turn, raises losses in a sector that is already reeling under losses. Whatever the Prime Minister decides, even if it doesn’t need to be ratified by the Supreme Court (assuming e-auctions are banned for the moment), given the extent of the shortages, it’s likely the scorching summer will be matched by sharp power outages as well.