The amount of coal imported by India is likely to drop over the next five years, despite the fact

that the overall demand for coal in the country is expected to leap from 600million tons a year currently, to over 750-million tons a year by 2011. To support the Indian economy, which is growing at a steady rate of about 9% a year, the rapidly developing country launched an initiative, in 2006, to develop five ultramega thermal power stations along the coast. Each power station is expected to have a generation capacity of 4 000 MW and will use both Indian and imported coal. Against this backdrop, one would assume that India would need to import a great deal more coal than it does today but it seems that this may not be the case. The government in India has now opened up mining for not only the private sector, but has also granted mining blocks to electricity-generation utilities for extracting coal for their captive use. With the entry of the private sector and electricity-generating utilities in coal-mining, there is a likelihood of an increase in domestic coal availability, and also more stability in coal prices, explains Maharashtra Power Gener-ation MD Ajoy Mehta. Currently, about 75% of total domestic coal production is used in the power sector. By privatising the coal-mining sector, it is likely that coal reserves will be more efficiently and quickly extracted, thereby meeting the demands of the inland power stations in India. India has coal reserves of 253-billion tons, which is predominantly thermal coal with a very high ash content, and low sulphur and low calorific value. With an aggressive indigenous production programme, the imports are likely to drop, says Mehta. The electricity sector in India has lagged behind the overall growth trajectory, and is currently moving at 7,4%. Simultaneously, manufacturing has recorded growth of 12,4%, and the service sector is recording growth of 11%. To keep up with this phenomenal growth, it is expected that the electricity industry will grow at a much higher rate, particularly over the next five years. Overall, there is a great deal of excitement and growth in the Indian energy sector, which is being fuelled by the robust economy. With strong democratic traditions and strong fundamentals, the Indian economy will remain on the growth curve for a long time to come. In the long term, energy needs will predominantly continue to be met from coal. However, with increasing availability of other energy sources and efficient technologies, the volatilities in the coal market are likely to settle and one could expect a very mature and deep coal market to emerge in India, states Mehta. Currently, coal accounts for about 65% of the total available electrical energy, followed by 26% for hydro- power, 6% for renewable energy, and about 3% for nuclear power generation. While it is expected that coal will continue to dominate the power generation mix, it is expected that the contributions from hydro and nuclear will increase substantially going forward.

Only time will tell whether imports of coal into India increase or decrease over the next five years, and opinions vary from analyst to analyst. How these various forces play out over the next five years remains to be seen. It is expected to be a somewhat turbulent period, and it is very difficult to forecast which way imports will go, concludes Mehta. Edited by: Martin Zhuwakinyu