The Indian power industry must cut its dependency on coal by encouraging
alternative energy sources, ensuring enhanced energy security for
the future, according to a new report by energy experts GlobalData.
The new report cites the Indian government's orders to the country's
largest state-run supplier, Coal India Ltd, as a desperate move which will
not save the industry. CIL must sign fuel supply agreements with utilities, in
hopes that this will push the monopolistic company to boost its output and
ease the current coal supply shortage. However, this will not be enough to
ease looming coal shortages.
The directive states that CIL, the world's biggest coal miner, must sign
contracts to supply at least 80 per cent of the required coal to fuel-starved
power utilities, risking a penalty of 0.01 per cent of the shortfall in supplies
to the utilities. However, this penalty will only apply after three years, and
will therefore have no short-term effect on the coal supply shortage. CIL
dominates the domestic coal scenario in India, and its near monopolistic
position results in supply bottlenecks and delays in coal field development.
There is a growing need for a transparent and credible coal pricing policy
based on global norms.
Foreign policies also let India's coal industry down. Indonesia accounts
for 50 per cent of India's coal imports, and a new Indonesian policy stipulating
the benchmarking of coal prices to international market rates will likely
increase the cost of imports dramatically. Indian power generating companies
have sought government intervention in this new law, claiming it will
make imports economically unviable.
Australia, which accounts for 5 per cent of India's coal imports, has also
now issued a draft mining law to impose tax on coal and iron ore projects
from next year. The Association of Power Producers, a group of 13 private
companies, has asked again for government intervention, and has requested
that the Ministry of Power set up an expert committee to find appropriate
solutions to tackle the rise in import rates. However, until the Indian government
supports the coal industry or offers renewables as a suitably enticing
alternative, the country seems set to keep on struggling.
The Planning Commission's presentation paper for the 12th Five-Year
Plan (2012-2017) talks of diversifying into alternative energy sources to
limit the country's carbon footprint, achieve energy security, and diversify
its energy mix. India is actively seeking to develop nuclear power, which is
attractive in environmentally conscious countries desiring energy security
where demand for energy is growing at a fast pace.
India has 20 operational commercial reactors, while five more are
presently under construction. It is expected that India will add about
19,350 MW of nuclear power by 2020, and the nuclear fuel, technology
and related trade with India will be worth about $100 billion for the coming
two decades, and this trend shows that present developments may
enhance the role of nuclear power, providing energy security and addressing
growing environmental concerns.