The shortage of coal and the possibility of large-scale power outages have been the core of intense discussions in India in recent weeks, even as the government has denied a crisis and experts have dismissed it.
Energy sector experts noted that there is enough coal in the country, while a few among them observed that the shortage could likely be a way of setting the stage for further dilutions in important laws governing the coal mining and forest sector.
The central government, however, repeatedly asserted that there is no coal shortage even though several states and the capital, Delhi, warned of power outages attributed to the coal shortage.
Coal availability
Sudiep Shrivastava, an environmental lawyer who has been closely tracking the coal sector, told Mongabay-India that the availability of coal at the mines and the power plants are two separate things. “The situation is such that there is stock at the coal mines, but it is not there at the plants.”
Shrivastava’s argument found its echo in the points put forth by the Union power ministry as well. In a statement on October 9, the power ministry said there are multiple reasons for the depletion of coal stocks at the power plant end – an unprecedented increase in demand for electricity due to the revival of the economy, being primary among them.
Additionally, heavy rains in coal mine areas during September this year is adversely affecting the coal production as well as the dispatch of coal from mines. An increase in the price of imported coal to unprecedented high levels is leading to a substantial reduction in power generation from imported coal in power plants leading to more dependence on domestic coal.
Non-building of adequate coal stocks before the onset of monsoon and legacy issues of heavy dues of coal companies from certain states (such as) Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh, Rajasthan and Madhya Pradesh are some of the other reasons for the shortage, the ministry explained. It dismissed the coal-stock shortage and emphasised that various stakeholders involved in the chain, such as Coal India Limited and railways, are closely monitoring the situation.
Later, on October 10, in another statement, the ministry of coal and Coal India Limited assured that there is ample coal available in the country to meet the demand of power plants. “Any fear of disruption in the power supply is entirely misplaced,” said the central government in the statement. “The coal stock at the power plant is sufficient for more than 4 days’ requirement.”
Under the norms, a power plant is supposed to have coal stock of 15 days-30 days depending on their distance from the mine, but if the stock dips to an amount that will last for less than a week, it is considered critical.
Shrivastava said the reality of this shortage is that it is a logistical issue. “Why will Coal India Limited supply coal without any payment – many state PSUs [public sector undertakings] owe huge amounts to it already. So this means the problem is of funds as well.”
Past instances
The shortage of coal is not a crisis that is new to the Indian economy. In fact, it has been a regular feature in recent years with the country faced a shortage of coal in both 2018 and 2014.
Rohit Chandra, assistant professor at the Indian Institute of Technology, Delhi, who has been closely tracking the energy issues in the country, told Mongabay-India that the “short term causes behind the shortage are the increase in the international price of coal, monsoon impacting mining and transportation of coal, and the capacity of power generation companies in paying an upfront cost for the coal being procured”.
“On top of that, the larger spirit of cooperation between the central government and other entities including states to resolve the coal-related problems has deteriorated over the last decade,” explained Chandra while indicating a trust deficit between states and the central government.
Energy sector experts note that no one may want to manufacture such a crisis as it is “bad for politics on both national and international level” and emphasised that the issue of logistics especially railway and the lack of a dedicated freight corridor are also the reason behind the shortage of coals plants in some states – especially those who do not have any coal mining within their territory and depend on mines in other states hundreds of kilometres away.
The government also claimed that the revival of the economy and industry after the second wave of Covid-19 led to an unprecedented increase in demand and consumption of electricity. “The daily consumption of electricity has crossed beyond four billion units per day and 65%-70% demand is being met by coal-fired power generation only, thereby increasing dependence on coal,” the ministry said.
According to the central government, the increased pressure on domestic coal is also due to a dip in the import of coal due to factors such as “import substitution and rising prices of imported coal”. The central government has been pushing for increasing the coal production in the country and also cutting down on imports from countries such as Indonesia.
But due to shortage (even as it was being denied), the central government asked thermal power generators to import coal for at least 10% blending with domestic coal.
Energy sector’s growth
Over the last decade, the central government has been focusing on increasing the installed capacity of power plants across the country. Since 2014, the central government has been consistently speaking about ending the coal imports and taking domestic coal production to one billion tonnes by 2024.
For this, the government resorted to a series of policy measures such as reforms in the mining sector in the last six years, including allowing commercial coal mining in 2020. Last year, following the first Covid-19 lockdown, the central government, to revive the economy, announced several measures to boost the mining reforms which included a major focus on the coal sector.
In fact, Prime Minister Narendra Modi had said in a statement that self-reliance (of India) is not possible without a strong mining and minerals sector as minerals and mining are important pillars of the country’s economy. The government has repeatedly talked about making India a five trillion dollar economy within the next few years and, according to the government, the growth in the mining and energy sector is critical to those plans as well.
Experts also speculate that Coal India Limited, which is the world’s single largest coal producer, has not been allowed to grow and that commercial mining should have been given a nod much earlier.
Former chairman of the Coal India Limited, Partha S Bhattacharyya, while explaining to Mongabay-India about India’s energy policies, including the transition with a specific focus on clean energy, said that going forward, India is expected to have a balanced focus on the combination of coal and renewable power.
He stated that the coal stocks at power plants plummeted from an availability for 28 days, in March, to that for less than a week, in October, due to a variety of reasons which included a sudden increase in demand from the industry as the economy is reviving.
“Over the past three years, a significant portion of the incremental energy demand was increasingly being met by renewable power but this year there was this sudden high demand and renewable power was not able to completely meet that,” said Bhattacharyya. “We also need to understand that the Coal India Limited has large dues pending (of about Rs 20,000 crores) with different stakeholders which has affected the performance of the company and that it can’t overstock the coal because that can result in coal fires.”
However, while answering a query about the government’s target of one billion tonnes of domestic coal within the next few years, he said that in his personal opinion that “one billion tonne target in the near future looks unlikely”.
Bhattacharyya said, “There are many reasons. We envisage a fast-paced renewable growth from 100 gigawatts to 450 GW by 2030 – if that happens a significant part of incremental demand will be met by renewables.”
“In that case, there may not be enough demand which could justify one billion tonnes of coal,” Bhattacharyya said. “Moreover, with India being a responsible country, which has low per-capita emission but overall high carbon emissions, the diversification of energy mix will remain a key area. In such a scenario, the growth of coal production to one billion tonnes may not become a reality in the short or medium-term future. They will be complementary to each other.”
Gautam Mohanka, Managing Director of Gautam Solar, said the “ongoing global energy crisis has unquestionably affected India, especially with the prevailing coal crisis”.
“The coal crisis can be partially attributed to the reopening of the economy and large industrial sectors,” Mohanka told Mongabay-India. “Considering that present requirements are anticipated to inflate further, solar energy could be the ultimate alternative. This is a perfect opportunity to evaluate the true potential of solar energy for the Indian energy sector. India has the potential to use this renewable and clean source of energy for both domestic and commercial needs.”
Key concerns
Following the concerns about coal shortage and subsequent power cuts, a major concern of environmentalists has been that this situation could be used as the bedrock for arguments in favour of dilution of coal-related laws and also dilution of forest and environmental regulations.
Shrivastava, the environmental lawyer, said, “This [shortage] has nothing to do with mines or the urgent need for new mines. However, fear is being spread that there will be a blackout to set the stage for diluting the present laws and regulations governing the coal sector and give a bigger pie to private players without addressing concerns of the communities affected.”
Shrivastava’s concern may not be without reason as during the last year the central government pushed ahead with mining reforms including that for the coal sector despite serious objections from the mining-affected communities who highlighted that their concerns were being ignored. The communities have also voiced how this push will mean more pristine and ecologically sensitive areas being opened for mining.
For instance, there are serious protests by the local communities including indigenous people in Chhattisgarh, who are against the opening Hasdeo Arand area, once considered an area that should be left undisturbed, for coal mining. The Union Ministry of Environment, Forests and Climate Change recently unveiled a note seeking comments and suggestions from all stakeholders for amendments in the Forest Conservation Act 1980. The environmentalists fear that the proposed amendment would result in more forest areas being opened up for projects including mining.
In addition, on October 8, the Union Ministry of Mines proposed amendments to the Minerals (Evidence of Mineral Content) Rules 2015 and the Mineral (Auction) Rules 2015 to encourage the participation of more people in the auction of minerals.
The government is also pushing for passing the Coal Bearing Areas (Acquisition and Development) Amendment Bill, 2021 in the Parliament. The amendment would “allow leasing of land and coal mining rights to any company after successful bidding, prescribes utilisation of land acquired under the Act for coal mining and allied activities, and provides for acquisition of lignite bearing areas under the Act.”
Shrivastava warned that the “hidden agenda” behind the shortage could be to “push the amendment of the draconian Coal Bearing Area Acquisition and Development Act”.
“Once that is done, the private companies will be able to take over the land even before compensation is fixed for people whose land is being taken away,” he said. “According to the provisions of the coal-bearing act, the land stands vested with government companies but after amendment, this door will be opened for the private companies as well. On the pretext of a coal shortage, the government is only going to dilute the safeguards that we have to protect the environment or the concerns of the affected communities.”
This article first appeared on Mongabay.
