(EnergyAsia, October 24 2013, Thursday) — Desperate to reduce the country’s growing dependence on expensive fuel imports, Indian planners are considering a proposal for local miners to deposit their surplus coal with state Coal India Limited (CIL) for later use when their power plants start up.
India’s rising imports of oil, coal and gas are adding to the country’s worsening current account deficit now hovering around US$70 billion. This, together with declining business confidence and the slowing economy, has caused the rupee to plunge 30% against the US dollar over the past year to a recent record low of 68.
Owing to corruption and mismanagement in the mining industry, India has failed to tap its vast coal reserves, ranked the world’s fourth largest, forcing it to import nearly 138 million tonnes of the fuel last year at a cost of US$16 billion.
Owners and operators of domestic mines are not allowed to sell their surplus coal, which is on course to rise another 20% by 2016.
CIL, which plays the central role of distributing and delivering coal to power companies, has been blamed for failing to play its part and contributing to India’s worsening power crisis. The company, which accounts for over 80% of India’s coal output, has also been missing its production targets over the last few years.
As a result, power companies have turned to importing coal. By 2017, India’s coal import bill could surge to US$25 billion, according to the Boston Consulting Group.
A committee within the powerful Planning Commission is weighing the proposal for the miners to “bank” their surplus coal with CIL for later use.
The committee is expected to make a recommendation later this year on how India can free up its domestic coal supplies and improve distribution flows. Power companies are not expecting the committee’s report to provide real solutions as numerous parties are vested with the current coal mining and supply system.