With state-run Coal India Ltd (CIL) struggling to meet its production target, the Prime Minister’s chief economic advisor is batting to frame policies for more private sector participation in the sector, to meet the country’s energy security needs.
“For the power sector, constraints such as availability of coal, land acquisition and environmental issues need to be tackled. CIL can use the private sector as an agent and use this to open new fields and enter into a contract so that they can supply coal at some agreed price,” said C Rangarajan, chairman of the PM’s Economic Advisory Council, while addressing a chamber meeting here.
This comes after the PM’s office asking power utilities to sign fuel supply agreements with CIL by end-November. The power sector’s coal shortage had in fact lead to a direction in March to CIL to abide by the instruction to sign agreements with power firms. Many a time, the power and coal ministries had locked horns regarding the issue of availability.
During the 12th five-year Plan, CIL has planned to raise production by another 180 million tonnes. Yet, additional requirement for the power sector alone would be above 240 mt, for a capacity addition of 35,000 Mw.
The Kolkata-based company was planning to raise production to 615 mt by 2016-17, compared to 435.8 mt in 2011-12.
“Coal India is already outsourcing private parties for production in some areas, while more private intervention is needed considering the efficiency with which they implement projects,” said a top CIL official. The firm’s chairman and managing director, S Narsing Rao, had recently said that by the end of the 12th Plan, supply to the power sector would be a little more than 90 per cent of its production. CIL’s production target for this financial year is 464 mt.
However, for the time being, there are only a few takers for even the revised fuel supply agreements. While CIL is putting the onus on power utilities, only 30 of 120 units have signed FSAs till now. There were 49 units set up between July 2009 and December 2011 and 81 more units were either set up or were to be commissioned between January 2012 and March 2015
“Even after the Centre intervention, the new draft FSAs are one sided. Other than revising the penalty slabs and doing away with moratorium, there is nothing new in the model. CIL is assuring us imported coal but let them import first. Since they have a monopoly, by the time of commissioning, all these units have to sign these FSAs in whatever forms it may be. With two separate drafts for public and private firms, these are discriminatory, too,” said Ashok Khurana, director general, Association of Power Producers.