|Stop those power plants|
|Friday, 03 June 2011 00:00|
You would think a country with a perennial shortage of power would welcome new power plants. In the past 27 months, 20,053 MW of fresh thermal capacity has been commissioned, but believe it or not, just around half of this capacity is functioning, and the prospects of new capacity going the same way are also pretty high. More than 32 power stations across the country, the major ones, have coal stocks for just seven days; 18 have stock for less than four days—the norm is 21 days. Coal supplies, not electricity supplies, have become India’s burning problem, and everyone is passing around the buck. The PM is very concerned, but two crisis meetings have already been postponed since May 17, the latest is now to take place next Tuesday.
The broad maths is simple. Each 1,000 MW of power capacity needs around 4.5 mn tonnes of coal each year. So, the 67,872 MW of thermal capacity on March 31, 2009, needs 306 mn tonnes, all of which has been committed by the public sector Coal India Ltd (CIL). The 20,053 MW of capacity needs another 90 mn tonnes, but CIL has just 41 mn to give, leaving 11,000 MW of the new capacity stranded. The 12th Plan target is to set up another 75,000 MW of thermal capacity—though a significant part will come from the ultra mega power plants which have either captive mines or are based on imported coal, the capacity constraint puts a question mark over their viability. Theoretically, imported coal is a good solution, but costs per unit of energy generated double if you use Indonesian coal instead of Indian coal at a location in the hinterland (Railway charges add around a fourth to costs!)—at a time when power sector losses are spiralling (see accompanying article), that’s adding to trouble.
Right now, the power plants are blaming CIL and want it to stop e-auctions—CIL’s FY11 revenues were R50,253 crore, profits R10,867 crore and e-auction revenues R8,810 crore. The other option, which the PM will have to decide on, is to pay CIL the e-auction price to preserve its profits but divert the coal to the power sector—the coal ministry has, in the past, said e-auctions flow out of a Supreme Court directive. Shortage of coal has meant CIL no longer signs firm supply agreements with new customers. CIL blames its slow growth in production, 452 mn tonnes in FY12, on the environment ministry’s no-go policy which it claims knocked out 20 mn tonnes of production in 2010-11 alone; CIL also says pithead stocks are up from 42 mn tonnes in FY08 to 70 mn tonnes in FY11 due to non-availability of rakes from the Railways. There is then the issue of 208 captive mines which are just producing around 15 mn tonnes of coal, around 0.6% of their peak capacity. Assuming Tuesday’s meeting doesn’t get postponed, the PM has a pretty full agenda.