The government is worried that inadequate coal supplies to power projects under construction could delay India’s power generation plans, thereby derailing the country’s economic growth.
The Prime Minister’s Office (PMO) has shot off missives to the ministries of coal and power to ensure adequate fuel supplies to power projects lined up for commissioning in the next four to five years.
This assumes importance amid the raging controversy over coal mines allocated to private firms and fresh details that show the government’s own departments and ministries are delaying critical projects with assured supplies from state-owned Coal India Limited (CIL) and its subsidiaries.
Investments worth Rs 1,24,745 crore are stuck due to various regulatory, procedural and environmental hurdles, banks told the finance ministry last week.
According to the power ministry, nearly 66,230MW out of the 84,756MW of proposed power capacity addition planned in the next few years is coal-based, but fuel supply agreements (FSAs) have been signed only for 16,000MW.
“Power utilities will require 842 million tonnes of coal in the terminal year of the 12th Plan (2016-17) and what is likely to be available is 682 million tonnes, which is also an optimistic scenario,” said a senior power ministry official on condition of anonymity.
The PMO, he said, has categorically said adequate fuel supply, essentially coal to power utilities has clearly emerged as a major challenge to achieve GDP growth rate of 8 to 9% for the next four to five years.
"The ongoing coal fiasco could derail majority of the 40,760MW thermal power capacity addition under construction in the private sector," he added.
Power minister Veerappa Moily has instructed the ministry's brass to ensure additional FSAs are executed and are legally binding so that bankers and financiers might be reassured.