(EnergyAsia, November 5 2014, Wednesday) — As part of its reform programme to solve India’s domestic energy crisis, the six-month-old government to Prime Minister Narendra Modi is planning to speed up
the development of 90 state-owned coal mines as well as auction off more than 70 others that it recently reclaimed from private companies.
The coal ministry appears to be gaining the upper hand against the powerful Coal India Limited, which accounts for 80% of the country’s domestic coal production, with its order to the state firm to immediately develop 90 of its 150 mines. The ministry is also planning to start auctioning off 72 coal blocks that have sat idle for the last two decades and are now ready to be developed after the Supreme Court revoked the licences of the private firms to mine the deposits.
India badly needs to exploit its domestic coal reserves, the world’s fifth largest according to BP, to supply its mostly coal-fired power plants that have often operated well below capacity due largely to the unreliable supply of feedstock.
The ministry has identified the 90 mines, which have a combined annual production capacity of more than 400 million tonnes, as ready for development, implying that CIL has failed in its supply role. CIL’s coal output of 462 million tonnes last year fell short of target by 20 million tonnes.
As a result, Indian power companies have been forced to import coal from other countries at high cost. India’s coal imports are on course to reach a record of more than 200 million tonnes this year after rising from 145 million tonnes in 2012 to 171 million tonnes last year.
The government is also preparing to open up the country’s inefficient coal sector to foreign investment, breaking decades of protectionism and incurring the wrath of powerful businesses and unions who see a common threat from any inflow of expertise and capital from abroad. The unions representing India’s coal workers, with the tacit support of business groups, are planning a national strike on November 24 unless the government repeals its ordinance passed on October 21 to open the coal sector to foreign investment.