INADEQUACY OF COAL SUPPLY: FINDING THE WAY FORWARD.

WORLD SCENARIO: 1. Coal is the most abundant and commonly used energy carrier in the world. In coalproducing countries, coal is often the cheapest fuel for electricity and heat production. The largest single consumer of coal as a fuel is the electrical power industry. Coal is primarily used for Power generation Coke manufacture Paper production Cement and ceramic materials Iron and steel production Chemical manufacture for heating and for steam generation
Top ten hard coal producers in the world

China-2549 mt USA-981 mt India-452 mt Australia-323 mt S Africa-244 mt Russia-241 mt Indonesia-231 mt Poland-90 mt Kazakhstan-83 mt Columbia-72 mt
Coal in world electricity generation

TOP COAL IMPORTERS(2007) JAPAN KOREA CHINESE TAIPEI INDIA PR CHINA GERMANY 182 MT 88 MT 69 MT 54 MT 48 MT 46 MT

TOP COAL EXPORTERS(2007) AUSTRALIA INDONESIA RUSSIA COLUMBIA 244 MT 202 MT 100 MT 67 MT

Poland-93% S Africa-93% Australia-80% China-78% Israel-71% Kazakhstan-70% India-69% Morocco-69% Czech Republic-59% Greece-58% USA-50%
Germany-47%

SOUTH AFRICA 67 MT PR CHINA USA 54 MT 53 MT

FUTURE COAL DEMAND IN THE WORLD: Worlds Growth rate of coal consumption averages 1.6% per year from 2006- 2015 and 1.6% from 2015-2030 reflecting the growth trends for both world GDP and world primary energy consumption. Maximum demand of coal is going to be for Power plants .Coal would cover 45% of worlds power needs compared to 39% in 2009.

DOMESTIC SCENARIO IN INDIA: In 2006, Indias coal-fired power plants represented 63 percent of the countrys total coal demand. Coal use for electricity generation in India is projected to grow by 1.9 percent per year till 2030, as an additional 65 GW of coal-fired capacity is brought on line. Currently, Indias government has tentative plans to add more than 50 GW of new coal-fired generating capacity during the period covered by its eleventh power plan (a 5-year period). Supply demand mismatch of thermal coal Power in recent time is a great concern for the power utilities when they have their aggressive capacity addition programme. Coal India Ltd, the main producer of coal in India, has indicated their production target along with the projection of coal demand. The targeted coal production left a gap more than 100 MMT at the end of terminal year XI th Plan.

COAL REQUIRMENT, AVALIABILITY AND IMPORT DURING XI PLAN (As on 31.08.2009) [ Source:CEA Presentation made on 30.09.09 in the Fuel Infrastructure Meeting under the Chairmansh
Member(Energy)]
Sl. No. a) b) Details Indigenous coal requirement Requirement of imported coal for imported coal based projects Total coal requirement Indigenous coal availability from:i) ii) iii) e) f) g) CIL SCCL Captive mines 278 30 11 319 21 14 294 30 19 343 34.6 23.3 313 30 20 363 38.0 25.3 335 32 21 388 46.0 30.7 360 32 22 414 74.0 49.3 2007-08# 340.0 -2008-09#` 377.6 0.4 2009-10# 401.0 3.0 2010-11 434.0 10.0 2011-12 488.0 19.0

c) d)

340.0

378.0

404.0

444.0

507.0

Total availability of indigenous coal Shortfall in indigenous coal availability (a-e) Requirement of imported coal to meet the shortfall in indigenous coal availability Total requirement of imported coal (b+g) Target of imported coal for utilities Actual import by utilities

h) i) j)

14.0 12.0 10.2

23.7 20.0 16.1

28.3 28.7 10.2

40.7 ---

68.3 ---

REASON FOR SHORTAGE:

Growth Lacking pace : Growth in the coal sector not commensurate with nations requirement of +8% GDP growth. Slow clearance of projects. In some cases linked mines are yet to be developed even though the power projects have been implemented on schedule. This is resulting into: Under utilization of installed capacity Ad hoc coal supply arrangements incurring additional expenditure. Further burdening of already burdened Rly transportation network.

Delay in development of captive coal blocks ; No. of Blocks 13 38 6 31 -------88 ---------

CPSUs State Utilities UMPPs

Private Developers Total

Projected supply from NTPC captive blocks Projected total supply from captive mines in each year from FY12 to FY17
Fig in Million Tones

Year 2012-13

PB 8.48

CB 3

KD 4

DL 2.5

TL 2

TOTAL 19.98

2013-14

9.5

4.5

28

2014-15 2015-16 2016-17 End use project

10 10 10

7 7 7

6 6 6 BarhII,Tanda Exp.

7 7 7 Darlipalli

4.5 6 8 Lara

34.5 36 38

BarhShortfall of II,Tanda Lara,Darlipalli Exp.

ISSUES IN DEVELOPMENT OF COAL BLOCKS Forest clearance for exploration. Most of the captive coal blocks are unexplored and need forest clearance before commencement of exploration. Environment and Forest clearance for the Coal mines. Delay in granting prospecting license. Land acquisition. Rail transportation of coal.

Deteriorating Coal Quality : More accent on open cast mining coal quality takes a hit. Inferior quality increases coal requirement. A huge loss for long distance consumers to transport waste. Affects the power plant equipment enhancing maintenance cost.

Logistic Constraints : Coal reserves are generally localized. Transportation of coal is an issue.

FINDING THE WAY FORWARD FOR COAL SOLVENCY : In response to future expansion of the coal supply/demand gap, India may have to (1) curb coal demand (2) expand coal production(3) utilize untapped potential(4) develop coal transportation infrastructure (5) secure coal import source.

As a national strategy a concerted effort is needed by Ministry of coal, Railway, Coal companies and end users for mitigating the coal supply/demand gap. .

Measures Necessitated : Policy Matters Time frame clearance of coal mining projects Up front forest and environment clearance Covering more area under geological mapping to unearth more coal reserves Allocation of more coal blocks to private players/ end users with strict deadlines and steep penalties for failure. Invite international players with state-of-the-art technologies to for efficient and effective exploitation of deep seated coal reserves. Institution of regulator in coal sector to overview performance, safety and preservation of reserves

Coal Companies Adaptation of modern technology to increase productivity. The rapid depletion of shallow reserves calls for exploitation of deep seated reserves through efficient technology. Enhance infrastructure for coal washing at the mine end to combat the quality issue. Timely creation of coal handling infrastructure so as to match the development of mine.

Power Utilities Efficiency improvement of power plants so as to reduce coal requirement- Use of super critical boilers. Creation of additional unloading facilities- wagon tipplers. Railway Creation of dedicated coal corridor for transportation of coal. Deployment of BOBR wagons for coal transportation. Timely materialization of important rail links. Finalization of Fuel Supply and Transport Agreement to facilitate commercially competent model for coal transportation.

IMPORT OF COAL: Apart from the above initiative on domestic front other alternative left to power utilities is to augment coal supply to fuel their plants through Import. There are several internal and external constraints for coal import. Govt of India is looking out for solution to internal constrains e.g. port and rail infrastructure development. However, external constraints is the volatility coal prices but also ocean freight too. Ultra Mega power Project based on Import Coal : UMPP at Mundra in Gujrat UMPP at Krishnapatnam in Andhra Pradesh UMPP at Cheyur in Tamil Nadu

TALKING POINTS ON INADEQUACY OF COAL SUPPLY : FINDING THE WAY FORWARD.

WORLD SCENARIO : Coal is the most abundant and commonly used energy carrier in the world. In coal-producing countries, coal is often the cheapest fuel for electricity and heat production. The largest single consumer of coal as a fuel is the electrical power industry. Top three hard coal producers in the world are China(2549 mt ),USA(981 mt, India452 mt Top four coal importers in the world are Japan (182 mt), Korea (88 mt.) , Chinese Taipei (69 mt.) & India (54 mt). Top four coal exporters in the world are Japan (182 mt), Korea (88 mt.) , Chinese Taipei (69 mt.) & India (54 mt). Coal in world electricity generation Poland-93%, South Africa-93%, Australia80%,China- 78% & India-69%.

FUTURE COAL DEMAND IN THE WORLD: Worlds Growth rate of coal consumption averages 1.9% per year from 2006- 2030 reflecting the growth trends for both world GDP and world primary energy consumption. Maximum demand of coal is going to be for power plants .

DOMESTIC SCENARIO IN INDIA:

In 2006, Indias coal-fired power plants represented 63 percent of the countrys total coal demand. Coal use for electricity generation in India is projected to grow by 1.9% percent per year. Currently, Indias government has tentative plans to add more than 50 GW of new coal-fired generating capacity during the period covered by its eleventh power plan. Supply demand mismatch of thermal coal in recent time is a great concern for the power utilities when they have their aggressive capacity addition programme. Coal India Ltd, the main producer of coal in India, has indicated their production target along with the projection of coal demand. The targeted coal production left a gap more than 100 MMT at the end of terminal year XI th Plan.

REASON FOR SHORTAGE:

Growth Lacking pace : Growth in the coal sector not commensurate with nations requirement of +8% GDP growth. Slow clearance of projects. In some cases linked mines are yet to be developed even though the power projects have been implemented on schedule. This is resulting into: Under utilization of installed capacity Ad hoc coal supply arrangements incurring additional expenditure. Further burdening of already burdened Rly transportation network Deteriorating Coal Quality : More accent on open cast mining coal quality takes a hit. Inferior quality increases coal requirement. A huge loss for long distance consumers to transport waste. Affects the power plant equipment enhancing maintenance cost.

Logistic Constraints : Coal reserves are generally localized. Transportation of coal is an issue.

FINDING THE WAY FORWARD FOR COAL SOLVENCY :

In response to future expansion of the coal supply/demand gap, India may have to (1) curb coal demand (2) expand coal production(3) utilize untapped potential(4) develop coal transportation infrastructure (5) secure coal import source.

As a national strategy a concerted effort is needed by Ministry of coal, Railway, Coal companies and end users for mitigating the coal supply/demand gap. . Measures Necessitated : Policy Matters Time frame clearance of coal mining projects Up front forest and environment clearance Covering more area under geological mapping to unearth more coal reserves Allocation of more coal blocks to private players/ end users with strict deadlines and steep penalties for failure. Invite international players with state-of-the-art technologies to for efficient and effective exploitation of deep seated coal reserves. Institution of regulator in coal sector to overview performance, safety and preservation of reserves

Coal Companies Adaptation of modern technology to increase productivity. The rapid depletion of shallow reserves calls for exploitation of deep seated reserves through efficient technology. Enhance infrastructure for coal washing at the mine end to combat the quality issue. Timely creation of coal handling infrastructure so as to match the development of mine.

Power Utilities Efficiency improvement of power plants so as to reduce coal requirement- Use of super critical boilers. Creation of additional unloading facilities- wagon tipplers.

Railway Creation of dedicated coal corridor for transportation of coal. Deployment of BOBR wagons for coal transportation. Timely materialization of important rail links. Finalization of Fuel Supply and Transport Agreement to facilitate commercially competent model for coal transportation.

IMPORT OF COAL: Apart from the above initiative on domestic front other alternative left to power utilities is to augment coal supply to fuel their plants through Import. There are several internal and external constraints for coal import. Govt of India is looking out for solution to internal constrains e.g. port and rail infrastructure development. However, external constraints is the volatility coal prices but also ocean freight too