Oct 1 2012 | Focus

Coal Critical

The steps taken by Government of India are not adequate to resolve power shortage situation across the country. ‘Power for all by 2012’ largely remained a slogan on the paper and not on the ground. The energy needs of the country mainly electricity are multiplying each passing year. The demands from various states are putting lot of pressure on the existing grid. The disturbances in the grid in July led to collapse of Northern, Eastern and North Eastern electricity grid affecting a consumer load of nearly 55,000 MW. All kinds of sectors and services were affected including Railways, Airports, Manufacturing, and Households etc. The solution in sight so far is only mere assurances from the Government.


The Coalgate issue has worsened the situation on the fuel supply front, as many of the power projects in India are dependent on coal. The cancellation of coal blocks is likely to add pressure to the existing coal producers and the gap between demand and supply of coal will widen further. The current share of coal based power generation in the installed capacity is 56.92%. The over dependency on coal as fuel to generate power will cost India much in terms of lower growth rate, and slow down in many of the vital sectors of the economy such as manufacturing, steel, transport, etc. It also adds to the environmental degradation and atmospheric pollution. The coal consumption for power generation stood at 278 million tonne in 2004-05 which has touched 417.56 million tonne during 2011-12.The demand for power is ever increasing owing to the increase in the manufacturing activity across the length and breadth of the country, large scale urbanization is also leading to surge in demand from the transport, housing, hospitality and retail sector. All these are ultimately adding up to more coal based power projects.


Power utilities had reported a generation loss of 8.7 billion units in 2011-12 (up to February, 2012) due to shortage of coal. In March 2012, the Union Minister of State for Power KC Venugopal had informed the Rajya Sabha that as many as 18 power plants in the country are faced with critical level of coal shortage. Of the 89 thermal power projects being monitored, 34 had fuel (coal) stock less than seven days and 25 of these had less than four days stock. During April-June, 2012, coal-based generation was 163.06 Billion Unit (BU) against the target of 153.85 BU, representing an achievement of 105.98% and a growth of 13.68% over the actual generation of 143.44 BU during April-June, 2011. The power utilities have, however, reported a generation loss of about 2.9 BU due to shortage of coal during April-June, 2012. For the year 2012-13, against a requirement of 476 Million Tonne (MT) domestic coal for meeting the generation requirement from coal based thermal power stations; availability of indigenous coal was estimated to be around 407 MT. In order to mitigate shortage of coal, Power Utilities have been advised to import 46 MT coal (equivalent to 69 MT of domestic coal in view of higher calorific value of imported coal). In order to ensure that the coal is made available as per the pact signed with proponents of new power projects. The Coal India board has agreed to pay a 1.5 percent penalty if its supplies amount to 65 to 80 percent of the contracted volume and 5 percent if they reach 60 to 65 percent.


India’s power production mainly depends on Coal as fuel. India needs to seriously focus on improving the availability of domestic coal by developing more mines and encourage sectoral players to acquire mines abroad and thereby improve fuel security. It is high time opportunities to tap coal abroad should be pursued with vigour. It is estimated that by the terminal year of the 12th plan, India would require to import 213 million tonne against 35 million tonne in the terminal year of the 11th plan. With the present production plans indicated by coal companies, India may have to import as high as 213 Million tonne of coal by the terminal year of 12th plan as against 35 million tonne required to be imported in the terminal year of 11th plan. Availability and pricing of coal are two crucial issues confronting the power sector today. On the domestic front, fuel supply agreements have not been signed between coal companies and generators for plants commissioned after March 2009. On one hand increase in production of coal in the country is not able to keep pace with the capacity addition in the 11th Plan, on the other hand there are issues related to pricing of imported coal. Realizing the importance of these issues, the Prime Minister had already set up a high level committee of secretaries to find solution for these issues. It is expected that these issues will be resolved shortly. The initiatives have already been taken for execution of fuel supply agreements for plants commissioned beyond March 2009.


As per the Economic Survey 2010-11 figures, the electricity generation growth is dismal so far. The growth was recorded at 5.2% (2005-06), 7.2% (2006-07), 6.4% (2007-08), 2.8% (2008-09) and 6.0% (2009-10). During the 11th Plan period the country has added about two-and-a-half times of the capacity that was added during the 10th Plan period. 80,000 MW capacities are under construction for the 12th Plan. The average per capita consumption of electricity in the country for the year 2009-10 was 778.63 kWh. The transmission and distribution losses of the country for the year 2009-10 were 25.39%.

The government had set a target of 78,700 MW during the 11th Five-Year Plan period, which was revised to 62,374 MW by the Planning Commission in its mid-term review citing coal shortage and environment reasons. Power generation capacity addition achieved in the Eleventh Plan is 54,964 MW (88% of MTA target). The capacity addition during the Eleventh Plan is about 260% of the total capacity added during the Tenth Plan.

The All India power supply position for April-August 2012 shows a deficit of 8.5%, and 9.2% for August 2012. The power deficit figures for Northern Region stands at 10.6%, Western Region at 2.1%, Southern Region at 16%, and Eastern Region at 4.9% and North-Eastern region witnessed 6.3% deficit. The country faced a peak demand shortage of 11% for August 2012 and 9% for April-August 2012. The All India thermal plant load factor was 74.8% in 2004-05, 73.32% in 2011-12 and 69.91% in 2012-13 up to August 2012.


• Environmental clearance for power projects and mining proposals needs to be expedited.
• Large chunks of 11th Plan addition are coal based projects. The shortage of coal has widened from 4 million tonne (mt) in 2004-05 to 40 mt in 2010-11. Imported coal is the need of the hour.
• Nuclear project proposals are attracting lot of protests from the public at large.
• Equipment required for producing power using renewable resources are priced high and therefore taking time to reach the masses.
• Availability and pricing of coal are two crucial issues confronting the power sector.
• Land acquisition is a newer challenge.
• Making electricity available at a reasonable cost is a big challenge.
• Levying duty on imported power generation equipment so as to protect the domestic equipment manufacturers
• Reducing T&D losses.
• Availability of ports and rail facilities for transporting imported coal.
• Availability of land, water and ash disposal facilities for thermal power plants.
• Implementation of smart grid technologies to improve overall efficiency
• The Government should ease norms for power project funding and should provide a window for faster processing of such loans.


Report of Working Group on Power for 12th Five Year Plan estimates the investment requirement during 12th Plan in power sector (on all India level) at Rs 13, 72,580 crore. This includes funds required for generation, transmission, distribution, captive power plants, R&M of power plants, Research and Development, DSM, fund required for RE (Renewable Energy) projects etc. This also includes advance action funds requirement for 13th Plan projects. The investment in power generation and distribution has made India as one of the most attractive investment destinations for power in the world.

Power Projects


NTPC Group currently has a total installed capacity of 39,174 MW and is targeting an additional capacity of
14,038 MW in the current Five Year Plan (2012-17). Power major plans to spend more than Rs 1.38 lakh crore over the next few years. The upcoming projects include Mauda II, Vindhyachal IV and V (all have 1,000 MW capacity), 800 MW Kudgi, 1,320 MW Barh-I, 500 MW Rihand-III and 800 MW Koldam.

The Government of India plans to build imported coal based 4,000-MW Ultra Mega Power Projects (UMPP) at Cheyyur, Tamil Nadu costing Rs 20,000 crore. PFC is the nodal agency for this project. So far the environmental clearance is received. This project would take four months to see forward movement.

PFC is the nodal agency for setting up 4,000 MW power project at Bedabahal in Orissa based on domestic coal. In June 2011, PFC had invited RFQ for this project. The investment for this project is around Rs 20,000 crore.

Sterlite Energy is setting up 1980 MW Talwandi Sabo power plant in Punjab costing Rs 11,000 crore. The first unit will be ready by April 2013. The EPC contract of this project has been awarded to China based SEPCO Electric Power Construction Corporation.

Sri Goindwal Sahib thermal plant With 540 MW capacity is being constructed at a cost of Rs 3,000 crore in Punjab. This is likely to be commissioned in May 2013.

L&T is constructing 1400 MW Rajpura Thermal Plant in Punjab. This project will cost Rs 8,000 crore. The power generation is expected to start by the end of 2013.

Total Installed Capacity (As on 31st August 2012)






















Total Thermal












Hydro (Renewable)






Renewable Energy Sources (MNRE)






-Sandeep Sharma, Executive Editor / Project Reporter

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