The government has ensured availability of enough coal to meet any rise in power demand, which is natural due to increased economic activities in the current financial year as compared to the pandemic years
India has significantly enhanced its domestic coal production plan to meet a growing power demand for 2022-23, with more than 20% year-on-year jump in the output at 934.53 million tonne, including over 83.5% increase in production from captive blocks, besides pressing state-run Coal India Ltd to help states in importing 14.46 million tonne of coal for the first time, officials familiar with the development said.
The government has ensured availability of enough coal to meet any rise in energy demand, which is natural due to increased economic activities in the current financial year as compared to the pandemic years, when coal-based power generation was significantly low, the officials said, asking not to be named. India has the world’s fourth largest coal reserves and is the second-largest producer globally.
“Total power generation with domestic and imported coal in May this year was 102.42 BU (billion unit) as compared to 91.6 BU in May 2019 [a non-Covid period], less than 12% growth in three years. This is manageable provided states nudge their generators to stock enough coal for the monsoon contingency well in advance,” one official said.
Citing official data, he said total coal-based power generation plunged to 69.7 BU in May 2020 due to the Covid-19 pandemic and a consequent nationwide lockdown. It could not fully recover in May 2021, when the generation was 80.9 BU.
“Additionally, CIL [Coal India Ltd] is helping states in importing coal to get them better rates through bulk purchase besides reducing logistics and other costs,” a second person said. CIL is all set to float a tender to import massive 12 million tonne of coal soon after the first tender of 2MT was issued by it on Thursday, he added.
A third official, a top Union government functionary, said that due to skyrocketing prices of fossil fuels, India is constrained to enhance both domestic coal output as well as import of coal to meet the country’s growing energy requirements. According to a Goldman Sachs’ forecast, Brent crude oil prices would average $140 a barrel between July and September. The average price of Brent crude this week (excluding Friday trade) was $121.68 per barrel. The Energy Information Administration (EIA) predicted that the US natural gas spot prices would remain high to average $8.71 per million British thermal units (MMBtu) this summer due to constricted supply because of geopolitical reasons.
In the given situation, India will have to rely on coal as primary energy source, the second official said. Several state electricity distribution companies (discoms) have placed orders for imported coal to blend it with domestic coal to maintain the necessary stocks at power plants because coal mining and its transport during monsoon months get affected, he said.
Besides, domestic output by CIL and Singareni Collieries Company Limited (SCCL) has also been ramped up in 2022-23 by 12.42% and 7.61% to 700MT and 70MT respectively, the second official said. The move will provide much-needed respite to the country, where coal still remains the primary fuel in its energy basket, accounting for 51% (204.080 GW) of the country’s installed power generation capacity of 399.497GW.
The government’s move comes in the backdrop of electricity demand rising again after a dip because of the early onset of monsoon. India recorded an all-time high peak power demand met of 207.111 GW on April 29. The peak maximum demand met on June 9 was around 211GW.
While CIL is helping those states that would want a central agency to procure coal from overseas, the government is also in talks with many coal producing countries to get supply on discount. Mint on June 1 reported that the government could initiate negotiations with Russia, Australia, Indonesia and South Africa to help CIL import coal at a discounted rate.
“It is a matter of serious concern that several power plants based on imported coal have stopped procuring coal from overseas because of surging price in international markets and demanding supply of cheaper domestic coal because it is cheaper. Respective states should nudge them,” the official mentioned in the first instance said.
Citing official data, he said there is about 61% decline in import of coal by the power sector at 27 million tonne (MT) in 2021-22 as compared to 69.21MT in 2019-20, which was a non-Covid year. Even during the peak pandemic period in 2020-21, when power consumption dropped due to the prolonged national and local lockdowns, coal import by the power sector was 45.46 MT.
Source: Hindustan Times