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Sluggish coal sector to dampen power generation
The failure of Coal India Ltd. (CIL) to ramp up production in response to the increase in thermal capacity addition is likely to create coal shortage issue in the country this year.

The weak coal sector will continue to affect thermal power generation in 2013 due to a gap between coal demand and supply, and this gap has been increasing rapidly in recent times. In 2011-12, installed coal based thermal plants capacity increased by about 19.3 per cent while coal production in the country went up by just over 1.4 per cent. In the current financial year, capacity addition of more than 10000 MW thermal capacity is expected.

Coal demand has risen dramatically due to the commissioning of new coal-fired thermal plants in India, and this trend will continue to due power shortage in the nation. There is also delay in the development of captive coal blocks, which have been allocated to power generators, and this has lead to widening of the demand-supply gap

The present problem has its roots in 2009, when CIL decided not to sign fuel supply agreements for emerging power projects due to limited coal output. When the government put pressure, it began supplying coal to meet half the demand of those projects for which letters of assurance had already been signed.

As of today, 24 thermal plants in the country have less than four days of coal supply. Eight thermal plants have coal stock of less than a week - and the reason for this is lack of supply from CIL and its subsidiaries.

CIL, on its part, has partially blamed the Railways for being a coal guzzler for its thermal power project in north India. CIL also claims that it provides at least 75 per cent of coal availability to all power stations in the northern region. 

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