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  3. Coal imports could account for 29% of demand in coming years

Coal imports could account for 29% of demand in coming years

04 Jul 2011 Evaluate

In five years, India could be forced to import almost 30 per cent of the coal required to meet its electricity needs. This would mean that consumers across the country could find electricity prices shooting up. Or else, distribution utilities would be pushed closer to bankruptcy on account of the increased strain on their finances from costly coal imports.

As per the calculations a projected requirement of 742 million tonnes of thermal coal for fuelling coal-fired stations by the end of the Twelfth Plan, only 527 million tonnes of domestic coal is likely to be available even in the best case scenario. This translates into a shortfall of 215 million tonnes or 29 per cent of the country's total requirement projected by 2017.

There are two aspects to the widening gap between demand and supply. The first is the sharp increase in project commissioning in the last three years of the current Plan period, which is expected to continue into the Twelfth Plan as well, aided mainly by a private sector surge. The second is domestic coal mining failing to keep pace with the demand. So far, 306 million tonnes of coal is tied up for supplies to 67,872 MW of existing capacity through firm FSAs (fuel supply agreements) signed by Coal India Ltd. The last such pact was signed in March 2009.

Since then 17,053 MW has been commissioned in the last couple of years (2009-10 and 2010-11) and at least another 6,000 MW is expected to come through by the end of this fiscal For these projects, against a requirement of 95 million tonnes, around 41 million tonnes of coal is likely to be available by the end of this fiscal.

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