Limited availability of coal could threatening to destabilize new power generation projects - Developers have already invested Rs 750 bn

An acute shortage of domestic coal is threatening to destabilize new power generation projects in which developers have already invested an estimated Rs75,000 crore. 

"New capacity of about 15,000 Mw is likely to be stranded for want of coal," a senior official with the power ministry told ET. This capacity is enough to light up three states bigger than Delhi. 

Coal India Limited had promised to supply 92 million tonnes (mt) of fuel to these projects, most of which were expected to be operational over the next one year. But the state-run firm now says it can deliver only 13mt. The available coal, which needs to be blended with imported coal before it is ready for use by generating companies, could produce barely 3,000 Mw of power. 

"Coal India has indicated that availability for power utilities is likely to be 319mt only. Of this, fuel supply agreements have already been signed for 306mt generating units commissioned up to March 31, 2009," the official said. "There is coal available at pit head locations, which is not being mined out due to inefficiency of Coal India and its subsidiaries," he added. 

Power project developers on Tuesday called on the Central Electricity Authority (CEA) to raise their concerns over the fuel supply issue but the authority said it could not do much. "We are helpless as Coal India has indicated that there is no coal for new projects," a CEA official said. 

The coal ministry official said CIL production would not improve unless the environment ministry clears the hurdles for mining projects. He said more than 150 mining projects of Coal India are awaiting clearance from the environment ministry. These projects have a coal production potential of 210mt. 

Experts say importing coal will also not solve the problem for new projects as there is a limit to which Indian boilers can use imported coal. 

Imported coal has higher heat value as compared with domestic coal and it is believed that it also corrodes boiler parts and emits more smoke when used in Indian boilers over longer period. Supply of coal by CIL to power utilities over the past few years has been falling short of requirement for the electricity generation targets. The utilities had reported a loss of 10.9 billion units in 2008-09, 14.5 billion units in 2009-10 and 5.3 billion units between April 2010 and December 2011.