Uday scheme to reboot coal demand in six months: Coal Secretary

Anil Swarup says scheme is reducing debt burden on the power distribution sector, resulting in increased competency

The power sector’s demand for coal, which has been stagnated lately, is likely to go up in six months as states join a scheme aimed at de-stressing financially ailing power distribution firms, called Ujwal Discom Assurance Yojna or Uday. The reason, said Coal Secretary Anil Swarup, was that the scheme was lowering the debt burden on the power distribution sector, leading to increased competency.

When the burden dissipated, he said, demand for power would pick up and thermal power producers would start asking for more coal.

Uday was launched to rescue the state power distribution companies, which were under almost Rs 4.3 lakh crore of debt. The Centre had allowed state governments to take over the debt and issue bonds.

Speaking on the sidelines of the 6th Asian Mining Congress in Kolkata on Wednesday, Swarup said: “The demand should pick up and increase in the coming six months.”

As on February 22, thermal power plants across India had an average coal stock of 36.04 million tonnes (mt), which can generate power for 24 days without replenishment. Coal stock a year ago was 19.49 mt, amounting to 12 days of production capacity.

From April-December last year, across India, 710,394.46 MW of power was generated from coal while it stood at 667,189.51 MW during April-December 2014.

Nevertheless, subdued power demand has resulted in the energy sector facing a critical moment besides coal stocks piling up in their warehouses.

The coal secretary ruled out the possibility of Coal India slowing down production as demand from the power sector becomes muted. “Fifteen months back, we had a scenario where there was an acute shortage of coal. But now it is abundant. I will be happy with a scenario where we can have abundant coal rather than a shortage.”

Despite the use of solar energy picking up fast, India’s dependency on thermal power will continue and demand for coal is expected to remain strong. “Solar energy will not be able to entirely fulfill the country’s demand for power.”

The government is also coming up with a policy in a month's time for those power companies who presently don't have existing coal linkages so that the fuel supply can be ensured.