Coal shortage puts Rs 5 trn investment in power plants at risk

<p> </p><p> </p><p>Asserting that Rs 5 trillion investment in coal-based power plants was in jeopardy due to the dry fuel shortage, Power Secretary S C Garg said there is an urgent need to bring in large global players for commercial mining to boost output. He was addressing a round table conference on coal here at India Energy Forum.</p><p>"Many of our coal-based power plants in power sector are today gasping for breath. Some of them are in NCLT, some are producing 15 per cent some 20 per cent, some of them are not producing at all. And as much as something like Rs 5 trillion investment is in jeopardy," Garg said.</p><p>Terming the current situation "absolutely untenable" when India is not able to exploit annually even one per cent of its explored coal resources, Garg said there was an urgent need for commercial mining by big global players to augment output.</p><p>"Let us get three to five global big players which can produce 100 million tonne of coal (each year)... that would require a very different way of allocating mines. Today, we allocate small mines... If we can get five of these (global players) who can produce 500 million tonne of coal in next two to three years or five years, situation would change," he said.</p><p>He took a dig at coal mines allocation system saying that it needs to be simplified and with ease of doing business it has gradually started changing. "There is something pretty wrong about the way we are managing our coal economy. We must become exporter of coal rather than importer. Why are we in this situation... Over last few years lots of mines have been allotted to the power sector.</p><p>"Close to about 290 million tonne of coal can be produced annually from the mines which have been allotted to power sector. But they are producing only about 15 to 20 million tonne including NTPC," he said. Garg stressed that 21 discreet measures are required to be taken from the time coal mine is allotted to the time it is operationalised including reducing the time for getting electricity connection.</p><p>Terming different ways of allocation of linkages "literally nonsense" he said linkages etc were a result of coal shortages and "we are trying to manage the situation as to how to allocate the lesser available coal". This problem could be sorted out with more production.</p><p>He said earlier cement and steel were also allocated in the same manner but the situation has improved in those sectors. The Secretary also said the letter of credit system has brought much needed discipline in power sector. "Energy purchase has to be paid for and it has introduced very basic concept into the system and we are happy that it has worked very well. Everybody is paying now," he said.</p><p>The power ministry has made it mandatory for discoms to open and maintain adequate letter of credit as payment security mechanism under power purchase agreements for buying electricity from generating firms.</p><p> </p><p>Referred from Business standard</p>