India must open coal to private miners: Tata Power

16 MAY, 2012, Economic Times
LONDON: India must bring in more private miners to develop coal reserves which majority state-owned Coal India Ltd has left untapped, Tata Power Company Ltd executive Amulya Charan said on Tuesday.

India is among the world's fastest-growing coal importers, according to analysts Wood Mackenzie. The country is battling chronic power shortages which are hampering the economy, largely due to the yawning gulf between domestic coal supply, demand and its ability to import fuel.

Coal India aims to raise its output to 464 million tonnes in 2012/13 after missing its scaled-down target for the previous year and is separately considering importing up to 15 million tonnes of coal at prices far exceeding domestic levels to help bridge that gap but these measures are not enough, Charan said.

India is likely to import up to 80 million tonnes of thermal coal in the current financial year. "Why should Coal India, a mining company, be in the business of importing coal, something needs to be done so that more is produced in the country," Charan said.

"Coal India's monopoly needs to be broken, private mining firms need to come in and start producing from its reserves, the sector needs to be opened up to some competition," he added. "Private miners would have a different approach and would bring reserves into production more quickly," he said.

Coal India, the world's biggest single coal mining company, has struggled to hit production targets for years because of difficulties compensating people for moving from their land and infrastructure problems. Most of the country's coal is in the north and there is not sufficient rail capacity to move it efficiently around the country to where it is needed.

Meanwhile, there is deadlock in discussions between the cabinet, the power generators and Coal India, with each party wanting the others to pay for the extra cost of imports and meaninglessly small penalties for Coal India if it fails to deliver contracted tonnages, he said. "I think it will take another two to three years before there is any progress in these discussions but we are hopeful," he said.

One aspect of India's power shortage which gains little attention is the loss of generated electricity due to inefficient transmission and distribution, he said.

Up to 40 percent of power can be lost through inefficient transmission and distribution, compared to around 6 percent in the Europe and the US, a statistic which, if it could be improved, would reduce the country's urgent need for coal, he said.