The global energy shortage is echoing around the world and India is no exception. Coal stocks at the various power plants in India are at critically low levels. Several states are reporting power outages and are sounding the alarm bells over possibly more possible blackouts. The chief ministers of Delhi and Andhra Pradesh have written to the Prime Minister seeking his intervention. Home Minister Amit Shah held a meeting with Power Minister RK Singh, Coal Minister Pralhad Joshi on Monday along with other senior officials to discuss the current supply situation and coal shortage hassles.
Anil Swarup, former secretary at the Ministry of Coal and Partha Bhattacharya, former Coal India Chairman shared their perspective on how India has reached this situation and how to resolve it.
According to Bhattacharya, non-payment of dues to Coal India and not keeping the stocks had actually taken away the shock absorbers.
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“There are a couple of factors here. First factor is the power stations - they all became very casual about it. They never built up the stocks as per norms. According to norms, the power plant should have inventory for about 15-30 days consumption depending upon the distance of the power stations from the coal company. They never did that that is number one. They never paid Coal India. So Coal India has run into huge arrears of receivables, which went up to Rs 23,000 crore. Even today it is Rs 18,000 crore. So, non-payment of dues to Coal India and not keeping the stocks had actually taken away the shock absorbers,” he explained.
The COVID-19 second wave hit Coal India hard in the first quarter with the company losing 250 workers to the pandemic. The extended monsoon did not help too with lots of mines being flooded.
"However, in these six months, rising to the occasion, Coal India produced 5.8 percent more coal than last year. And in terms of offtake, it was more than 20 percent of last year. So they did absolutely the maximum that the company can do under the circumstances,” the former Coal India chief said.
The problem lies deeper, according to forme coal secretary Anil Swarup. The coal crisis first came up in 2014.
“We have to look at the genesis of the problem. India has always been short of coal. Ironically, we sit on 300 billion tonne of coal but we don't produce as much and it has been there for a while," he said.
"The crisis actually first came up in 2014, as a consequence of the devastation caused by the then Comptroller and Auditor General of India (CAG) when all the private sector mines start mining and almost 90 metric tonne of coal, that was available from that sector, stopped. But we managed to tide over that crisis between 2014 and 2016 through various efforts,” Swarup added.
According to him, India can't do much about the demand side management.
“There is an international problem in terms of prices going up, there's a problem regarding rains, the demand has gone up as economy is picking up, we can't do much about any of these factors, but we can do a lot about supply of coal and that's where the problem is,” he noted.
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The history of coal crisis
In the private sector, production has not really gone up. Swarup says the Coal India chairmanship being vacant for a year in 2016 after Sutirtha Bhattacharya retired is a factor.
"If the production does not increase, you can't help the demand. But if the production had grown at the rate at which it was growing between 2014 and 2016, today, Coal India itself should have been producing more than 700 million tonne,” Swarup weighed in.
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Bhattacharya agreed with Swarup and added another factor at play.
“I completely agree with what Mr Anil Swarup said, the last three years coal production offtake has been absolutely flat and hovering around 600 million tonne. If you look at March 2021, Coal India ended up with a stock of 100 million tonne. If it produces more that all goes into stocks. Where does it keep it? The power stations had about 29-30 million tonne of stock,” he said.
For the entire discussion, watch the accompanying video.
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