Despite its advantage as the world’s third largest coal reserves, India is forced to import one-fourth of its coal requirements. Discuss the reasons and suggest measures to rectify the issue.
Refer – Live mint
IAS Parliament 6 years
KEY POINTS
· Coal is an integral and large part of our energy for the foreseeable future.
· India imported 171 million tonnes in the fiscal year ended March 2014, which was 15% higher than the previous year. But worse was to come.
· India a country with the world’s third largest coal reserves was forced to import one-fourth of its coal requirement, at record high prices.
Reasons
· Supreme Court’s decision to cancel all coal block allocations to private coal miners.
· This resulted in a transparent auction-based mechanism for coal distribution.
· End-users, shocked by coal shortages, bid aggressively in the mining auctions, taking domestic prices above global level.
· Unavailability of rakes – theevacuation rate from the mines is also constrained by rail capacity, measured in terms of connectivity, rake length (number of wagons) and tonnage per wagon.
· Stranded coal pile at pitheads indicates that it’s not a story of coal shortage, but of non-evacuated coal from their mines.
· The reluctance of utilities to purchase and stock the coal.
· The inability of Discoms to pay.
· Heavy rains due to monsoons affected Coal India Limited (CIL) production badly.
Solutions
· Allow more private players in coal mining or as mining operators.
· Allow private coal users to own or lease and run their own private rakes.
· Allow road movement of coal in addition to rail, at least in the monsoon months. This is prohibited on environmental grounds, but during the rainy season it should be less of a hazard.
· Increase the penalty for Fuel supply Agreements (FSA) non-compliance.
· Make it mandatory for power companies to have a minimum inventory of, say, two weeks of coal at all times.
· Speed up completion of rail links from pitheads to nearby power users on high priority.
