Amidst tight global supplies and price rise, it’s imperative to reassess the management of our coal resources and its impact on our energy security
Coal imports to India reached 90 million tonnes in 2010 and are further expected to touch 110 million tonnes in 2011 despite the current high prices. This is due largely on account of the growth in the economy through expansion of infrastructure and electricity supply. But it is also a result of continued insufficient quantity and inferior quality of domestic coal available. According to a PwC report, India currently imports 12% of its coal supply due to inefficiencies in coal transport from mining regions to coal plants located in the coastal regions, low quality domestic coal and slow reforms within the coal industry. The report adds that by 2030, total coal imports in India will exceed coal imports into the entire European Union by 10%. And with the current annual shortage of 142 million tonnes staring us in the eye, the question remains as to how India will address this shortfall to meet the growth in domestic demand.
In order to satisfy the burgeoning coal demand, the Indian coal industry needs more investment and private players to raise its production level. At the same time environment clearance and rehabilitation and resettlement (R&R) issues that create serious roadblocks for private companies have to be removed. “A comprehensive policy is required to be formulated for the purpose of effective and efficient utilisation of the nation’s coal resources. The abundance of coal promises to provide energy at affordable prices and can be a substitute for expensive imports to a significant extent,” says a CLSA report on the sector. Without doubt, the coal mining sector in India needs structural overhaul to attract investments that can help the sector meet the growing needs for raw material and power, steel, cement and other usages.
The Government has indeed made strides in this direction by allowing captive mining for various approved end usages. Although a number of coal blocks have been allotted since the 1990s to private players in the power, steel and cement industries for meeting their captive requirements, the progress made in bringing these blocks to production has been quite dissatisfactory till date. According to the Annual Report, FY 2010 of the Ministry of Coal; of the 208 coal blocks allotted to various companies including ultra mega power projects till FY 2010, only 25 mines have been commissioned till the fiscal year-end and were producing coal at nominal levels of 7-8% of the country’s total production. The problems being faced by the corporate sector (except coal mining companies like CIL) include lack of experienced manpower with a track record in commissioning large coal projects.
Among other recent initiatives by the government to reduce the demand/supply gap is the drafting of a new policy for auction of coal blocks, which will replace the existing system of allocating blocks for over a year. However, industry professionals argue that there is a need for streamlining the allocation process as also a need to monitor the progress of project implementation more closely. At the same time, the coal-mining sector needs incentives to encourage innovation and adoption of cutting edge technologies, which would not only make underground mining profitable but also boost quality and output besides serving the purposes of environmental risk mitigation. Failure to do so would be akin to shutting one’s eyes to what may turn into a grim reality – India does not have adequate extractable coal reserves either to meet current incremental demand or make long-term supply commitments. If we remain in a state of denial, we will not take the urgent and necessary steps to augment our coal reserves.
Read more....
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
In order to satisfy the burgeoning coal demand, the Indian coal industry needs more investment and private players to raise its production level. At the same time environment clearance and rehabilitation and resettlement (R&R) issues that create serious roadblocks for private companies have to be removed. “A comprehensive policy is required to be formulated for the purpose of effective and efficient utilisation of the nation’s coal resources. The abundance of coal promises to provide energy at affordable prices and can be a substitute for expensive imports to a significant extent,” says a CLSA report on the sector. Without doubt, the coal mining sector in India needs structural overhaul to attract investments that can help the sector meet the growing needs for raw material and power, steel, cement and other usages.
The Government has indeed made strides in this direction by allowing captive mining for various approved end usages. Although a number of coal blocks have been allotted since the 1990s to private players in the power, steel and cement industries for meeting their captive requirements, the progress made in bringing these blocks to production has been quite dissatisfactory till date. According to the Annual Report, FY 2010 of the Ministry of Coal; of the 208 coal blocks allotted to various companies including ultra mega power projects till FY 2010, only 25 mines have been commissioned till the fiscal year-end and were producing coal at nominal levels of 7-8% of the country’s total production. The problems being faced by the corporate sector (except coal mining companies like CIL) include lack of experienced manpower with a track record in commissioning large coal projects.
Among other recent initiatives by the government to reduce the demand/supply gap is the drafting of a new policy for auction of coal blocks, which will replace the existing system of allocating blocks for over a year. However, industry professionals argue that there is a need for streamlining the allocation process as also a need to monitor the progress of project implementation more closely. At the same time, the coal-mining sector needs incentives to encourage innovation and adoption of cutting edge technologies, which would not only make underground mining profitable but also boost quality and output besides serving the purposes of environmental risk mitigation. Failure to do so would be akin to shutting one’s eyes to what may turn into a grim reality – India does not have adequate extractable coal reserves either to meet current incremental demand or make long-term supply commitments. If we remain in a state of denial, we will not take the urgent and necessary steps to augment our coal reserves.
Read more....
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
IIPM Prof. Arindam Chaudhuri on Internet Hooliganism
Arindam Chaudhuri: We need Hazare's leadership
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
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