The case against private coal

So much has been written about the need to open up the coal sector, especially in terms of private commercial coal mining, that a common misperception prevails among those who agree with this. But no one seems to have thought of cross-checking the facts or weighing the pros and cons of such a move.

There is a myth that the shortage of coal in the country is due to the inefficiency of the public sector undertaking (PSU), Coal India Limited, and that it was responsible for the import of coal, which is far from true. Importing coal in 2013-14 was necessary. First, out of the current demand of 730 million tonnes (MT) of coal in 2013-14, 462 MT was supplied by CIL. Another 50 MT was produced by another PSU, and only 46 MT was sourced from private companies or state PSUs running captive coal blocks. It is important to note that in 1993, when this process of captive mining was started, the production of CIL was 210 MT. After 21 years and 218 blocks, private companies could produce only 46 MT of coal in 2013-14, whereas CIL, in spite of all the attempts by vested interests to sabotage its production programme, manages to produce 462 MT. One can see that in 2013-14, private sector participation was less than 10 per cent of total production.

It is also incorrect to say that coal shortage is responsible for the closure of any power plant. As per the latest Central Electricity Authority reports, presently we have 2.5 lakh MW of installed capacity, against our peak demand of 1.45 lakh MW. The peak demand deficit is only 5 per cent (a few states have a 10-15 per cent deficit) in the current year. The real villain behind our power woes is the transmission and distribution network, which delivers erratic supply. The desire of private power plants to charge super high power tariffs is also one reason for the closures, as several state discoms, as in Uttar Pradesh, are incapable of buying power at high rates.

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