Budget 2014-15 - Coal Sector Impact Analysis
Coal sector measures announced in the Budget 2014-15 verge on being the statements of intent, for which implementation may happen along the way. Some of the initiatives for enhancement of production and delivery of coal to power plants face challenges from legislative structures for allocation of coal blocks; difficulties in land acquisition, rehabilitation and resettlement; procedures for clearances and approvals; and, absence of evacuation infrastructure. For these, the government needs to set a direction. The Budget may not be the forum for such direction setting.
While the Budget talks of ensuring adequate supply of coal to the power plants estimated to be commissioned by March 2015, the shortfall is large and CIL may not be to able to increase production steeply. Fuel supply will continue to remain a risk element in generation capacity addition.
Optimization of coal transport is in the right direction. Linkages of coal from various coalfields to power plants have been far from optimal but rationalization entails technical challenges of coal quality and boiler design. However, there does certainly exist a potential for re-distribution of linkages for easing the burden on Indian Railways and thus unlock the potential for larger volume of transport purely by source and route realignments.
Coal washing has been purported, but that is not a new idea as the same is mandated by the Ministry of Environment and Forest directives for coal transport, and CIL has planned to raise coal washing capacity for thermal coal to 110 million tonnes per annum by the end of current plan period.
The Budget addressed the need to clarify on customs duty and CVD rate applicable to coal, which now stands at 2.5% for all classifications of coal.
The proposal to increase the Clean Energy Cess by Rupees 50 per tonne is going to marginally (around 2 paise per unit) raise the electricity tariffs.
While the Budget talks of ensuring adequate supply of coal to the power plants estimated to be commissioned by March 2015, the shortfall is large and CIL may not be to able to increase production steeply. Fuel supply will continue to remain a risk element in generation capacity addition.
Optimization of coal transport is in the right direction. Linkages of coal from various coalfields to power plants have been far from optimal but rationalization entails technical challenges of coal quality and boiler design. However, there does certainly exist a potential for re-distribution of linkages for easing the burden on Indian Railways and thus unlock the potential for larger volume of transport purely by source and route realignments.
Coal washing has been purported, but that is not a new idea as the same is mandated by the Ministry of Environment and Forest directives for coal transport, and CIL has planned to raise coal washing capacity for thermal coal to 110 million tonnes per annum by the end of current plan period.
The Budget addressed the need to clarify on customs duty and CVD rate applicable to coal, which now stands at 2.5% for all classifications of coal.
The proposal to increase the Clean Energy Cess by Rupees 50 per tonne is going to marginally (around 2 paise per unit) raise the electricity tariffs.
posted by Dipesh Dipu @ 4:34 AM
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