India’s Coal Conundrum: Balancing Supply and Demand

India’s coal industry has been marred by the ongoing disputes and disagreements between the Ministries of Coal and Power, contributing to what can be aptly described as “India’s Coal Conundrum.” These disagreements have created uncertainty and challenges in the power sector, where the primary concern is the consistent and smooth supply of electricity.

Despite the power sector’s assertion that domestic coal supply is a significant issue, Coal India, the public sector giant responsible for coal production, maintains that supply is not a problem. This raises the question: where does the problem lie? On August 25, the Ministry of Coal reaffirmed its commitment to ensuring an uninterrupted supply of coal.

Current Coal Stock Situation

The coal stock position, as of August 23, stood at a substantial 88.01 million tonnes, which represents a significant increase of 24.7% compared to the 70.61 million tonnes from a year ago. This boost in coal stocks indicates the ministry’s dedication to maintaining an ample coal supply amidst India’s Coal Conundrum..

Meanwhile, recent reports indicate that the Ministry of Power is planning to instruct thermal power plants (TPPs) to continue importing coal for blending with domestic supplies for another month until October. Earlier in the year, the ministry had directed power generation companies to procure coal through transparent competitive processes for blending, with a target of 6% by weight, ensuring sufficient stocks at power plants for smooth operations until September 2023.

The Coal Supply Debate

The crux of the issue appears to be the conflicting narratives on domestic coal supply. According to a senior official from Coal India Ltd, there is no shortage of domestic coal. Stock at domestic coal-based power plants as of August 26 was at 29.2 million tonnes, an increase of 5.4% compared to the same date last year. Despite the sudden spike in power demand in August, Coal India has supplied 3% more coal to the power sector this fiscal year compared to the same period last year.

This raises the question of why there is an annual argument over coal supply. PM Prasad, Chairman of Coal India, believes that the primary challenge lies in infrastructure rather than supply. He emphasizes that with sufficient domestic stock, there is no crisis on the horizon. Coal India’s production is set to grow at 11%, while the power sector’s demand for the PSU giant’s coal is expected to grow by only 4% over the previous year.

Future of Coal in India

Beyond the current disputes, there’s an ongoing debate about the future of coal in India. Prasad contends that coal will remain the dominant energy player for at least the next two decades. While its percentage share in the energy mix may decline, its volume is expected to grow. NITI Aayog and independent international agencies estimate that coal’s use in India will peak by the early to mid-2030s, even as India leads in renewable energy capacity growth. Coal’s affordability, abundance, and availability continue to make it a preferred energy source.

Infrastructure Improvements

To address the challenges of coal supply, steps have already been taken to improve first-mile connectivity (FMC), which involves the transportation of coal from pitheads to dispatch points. The Coal Ministry has initiated 55 FMC projects with a total capacity of 526 million tonnes per annum, involving an investment of ₹18,000 crore. Additionally, 19 more FMC projects for Coal India and the Singareni Collieries Company Ltd, with a capacity of 330 million tonnes, are planned for implementation by FY26-27.

Efforts are also underway to develop a National Coal Logistic Plan, including FMC through railway sidings near coal mines and strengthening the rail network in coalfields. This strategy aims to eliminate road transportation of coal in mines and upgrade mechanized coal transportation and loading systems under FMC projects. These improvements will lead to efficient and environmentally friendly coal evacuation in the future.

In conclusion, the coal supply challenges in India can be resolved through collaboration and a shared narrative between the Ministries of Power and Coal. Despite the disagreements and disputes, the data indicates that there is no immediate shortage of domestic coal supply. However, the focus should now shift toward enhancing infrastructure to ensure a seamless coal supply chain. As India continues to grapple with its energy needs and transition towards renewable sources, coal’s role remains significant, making efficient supply mechanisms crucial for the power sector’s stability and growth.

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