Coal shortage to trim 12th plan power target - Quoted in the Financial Chronicle
The government may have to lower the 12th plan target for 76,000 mw power generation from conventional and non-conventional sources. This is because the rising cost of fuel such as coal and gas and cost of funds have begun to impact the upcoming projects.
Experts Financial Chronicle spoke to said if things did not improve by the end of this year, the government might be forced to lower the 12th plan generation target to 54,000 mw.
To avert this, the government will have to accord top priority to raising production at Coal India’s existing mines, allocating new coal blocks through competitive bidding and even allowing mining in blocks with large prospects in no-go areas on a case-to-case basis. Shubhranshu Patnaik, senior director of power at Deloitte, said the government had plans to allocate 53 new coal blocks through auctions last year, but this did not fructify.
Besides, delays in and controversies over environment clearance also impacted sentiment.
“Companies are not getting coal linkages and there are no takers for power generated with costly imported fuel. New capacity expansion plans are stranded,” he said.
He pointed out that plants with the potential of running at more than 90 per cent plant load factor were running at under 50 per cent. “More than 10,000 mw capacity is working at less than 50 per cent PLF,” he added.
By 2016-2017 about 842 million tonnes of coal will be required but the availability will be 604 million tonnes, including 54 million tonnes imported, leaving a gap of 238 million tonnes. Even if Coal India increases production to 461 million tonnes from 415 million tonnes now, the shortage will still be 192 million tonnes, according to experts.
Repeated attempts to get comments from Union power secretary P Umashankar and also the additional secretary of power elicited no response.
Dipesh Dipu, partner of the Hyderabad-based Jenissi Management & Consultants, said if all the positive things accruing from policy changes were taken into account, there would still be a shortage of 120 million tonnes in 20-2017, impacting generation of 24,000 mw.
There is a limit to how much coal can be imported since existing power plants can blend only 15 per cent imported coal. This is because older plants have boilers designed for low quality Indian coal, which has high ash content. Imported coal traded in global markets tends to have a higher calorific value. Such coal will not be burnt completely or efficiently in the old boilers.
New power plants being set up use the supercritical boiler technology that can use up to 30 per cent of imported coal.
Investment bankers say issues like land, coal and now cost of funds will discourage at least the private players from setting up new plants during the 12th plan. Companies that have already commissioned new plants are finding it difficult to run at full capacity, according to an investment banker in SBI Capital Markets.
According to Central Electricity Authority data, PLF in coal-based thermal plants was 68.27 per cent in April-September last year, down from 71.2 per cent in the same period a year before.
The government is planning to start price pooling of coal where high-calorie imported coal will be blended with domestic coal to reduce the cost of operations and cost of power, especially for companies dependent on imported coal.
State electricity boards are not buying costly power, making it difficult for independent power producers to run plants at full capacity, say the experts.
Experts Financial Chronicle spoke to said if things did not improve by the end of this year, the government might be forced to lower the 12th plan generation target to 54,000 mw.
To avert this, the government will have to accord top priority to raising production at Coal India’s existing mines, allocating new coal blocks through competitive bidding and even allowing mining in blocks with large prospects in no-go areas on a case-to-case basis. Shubhranshu Patnaik, senior director of power at Deloitte, said the government had plans to allocate 53 new coal blocks through auctions last year, but this did not fructify.
Besides, delays in and controversies over environment clearance also impacted sentiment.
“Companies are not getting coal linkages and there are no takers for power generated with costly imported fuel. New capacity expansion plans are stranded,” he said.
He pointed out that plants with the potential of running at more than 90 per cent plant load factor were running at under 50 per cent. “More than 10,000 mw capacity is working at less than 50 per cent PLF,” he added.
By 2016-2017 about 842 million tonnes of coal will be required but the availability will be 604 million tonnes, including 54 million tonnes imported, leaving a gap of 238 million tonnes. Even if Coal India increases production to 461 million tonnes from 415 million tonnes now, the shortage will still be 192 million tonnes, according to experts.
Repeated attempts to get comments from Union power secretary P Umashankar and also the additional secretary of power elicited no response.
Dipesh Dipu, partner of the Hyderabad-based Jenissi Management & Consultants, said if all the positive things accruing from policy changes were taken into account, there would still be a shortage of 120 million tonnes in 20-2017, impacting generation of 24,000 mw.
There is a limit to how much coal can be imported since existing power plants can blend only 15 per cent imported coal. This is because older plants have boilers designed for low quality Indian coal, which has high ash content. Imported coal traded in global markets tends to have a higher calorific value. Such coal will not be burnt completely or efficiently in the old boilers.
New power plants being set up use the supercritical boiler technology that can use up to 30 per cent of imported coal.
Investment bankers say issues like land, coal and now cost of funds will discourage at least the private players from setting up new plants during the 12th plan. Companies that have already commissioned new plants are finding it difficult to run at full capacity, according to an investment banker in SBI Capital Markets.
According to Central Electricity Authority data, PLF in coal-based thermal plants was 68.27 per cent in April-September last year, down from 71.2 per cent in the same period a year before.
The government is planning to start price pooling of coal where high-calorie imported coal will be blended with domestic coal to reduce the cost of operations and cost of power, especially for companies dependent on imported coal.
State electricity boards are not buying costly power, making it difficult for independent power producers to run plants at full capacity, say the experts.
posted by Dipesh Dipu @ 1:15 AM
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