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Feature
Coal ministry faces huge backlog of
linkage applications
Arindam Bandyopadhyay
At a time when the coal sector is struggling to grow its
domestic production base, India’s appetite for long
term coal linkage is increasing at a dramatic pace.
The major user segment, namely the power sector, is showing
an almost insatiable demand for secured coal supply while
cement and sponge iron units too are making a beeline for the
coal ministry, seeking new linkages.
As on September 2010, official data reveals that 1267
applications are pending before the coal ministry, which
has sent the list to the power and steel ministries and the
Department of Industrial Policy & Promotion (DIPP) for
ratification. Of these, 774 are power projects, including
applications from State Electricity Boards (SEBs), Independent
Power Producers (IPPs) and captive power units. Others
include 355 sponge iron units and 114 cement projects which
are awaiting the ministry’s approval for the same.
Although some of these cases, the ministry claims, were
considered by the Standing Linkage Committee – Long
Term or SLC (LT) in the past and deferred on account of
various reasons, the massive requirement itself puts a
heavy burden on the coal ministry and state-owned Coal
India Ltd (CIL).
Given the sluggish pace of growth in captive mining and
no-go norms imposed by the forest and environment ministry,
industry sources feel the ‘waiting period’ may prove to be
long enough for these projects, costing them precious time and
resulting in substantial cost over-run.
Power sector’s requirement
As on September 2010, as many as 774 power projects had
their applications for new coal linkages pending before the
ministry. Of these, 92 applications were from SEBs and private
power generators, aggregating new capacity addition of over
1,32,000 MW.
The preferred sources of supplies, as indicated by the
projects, are Central Coalfields Ltd (CCL), Eastern Coalfields
Ltd (ECL), Northeastern Coalfields Ltd (NECL), Southeastern
Coalfields Ltd (SECL) and Western Coalfields Ltd (WCL),
among others.
Along with this, there were 338 applications pending for
IPPs and 344 for captive power units. Companies who applied
for captive linkages include Hindalco, Nalco, Indian Oil
Corporation (IOC), JSW Steel, Jai Balaji Industries, Vedanta
Aluminium, Welspun Maxsteel, and so on. Additionally, 12
captive power units from cement manufacturers were also
awaiting coal linkage.
The skyrocketing growth in the Indian power sector, which
has the world’s fifth largest generation capacity at 1,64,000
MW, is the main driver of coal demand in
the country.
According to official data, India’s thermal
coal imports rose by about 16 percent to 44
million tons (mt) in the year ended March
2010 from 38 mt a year earlier. In 2010-11,
India’s utilities are expected to increase coal
imports by about 16 percent to 51 mt.
As on October 18, as many as 23 coalfired
generators had stockpiles of less than a
week and 11 plants had less than four days
of inventories. This is higher than 21 plants
with less than seven days of supplies, a week
earlier.
According to the Central Electricity
Authority (CEA), the power plants typically
must have coal inventory adequate to last for
15 to 30 days.
It is mainly due to the huge demand
from the power sector that India’s coal
consumption is growing at a rate of 10 percent
compared to domestic supply growth of 7
percent. The supply shortage is being met by
COAL INSIGHTS 36 October 2010