Author: Pradeep Kaimal
Energy Review, Vol 5. Issue 03. 2023
The Government of India has set an ambitious target to produce around 1.3 billion tonnes of coal by 2025 and around 1.5 billion tonnes by 2030. India achieved a record coal production of 780 million tonnes and auctioned 64 coal mines for commercial usage as per the Year End Review 2022 released by the Ministry of Coal. In the process, the government ensured that thermal power plants and other sectors across the country had adequate access to coal. The Ministry's moves such as opening up coal mines for commercial auction, holding investors' conclaves, etc. are likely to help India's journey in energy security.
According to government estimates, India's coal inventory as of 1 April 2022 recorded an increase of around 9,285 million tonnes compared to the previous year, rising from around 352,125 million tonnes to 361,411 million tonnes. Production in fiscal year 22 for the April to November period surged from 448 million tonnes to 524 million tonnes, recording a 17% growth.
Interestingly, the government has upped the ante for customer satisfaction through quality assessment of supplies via independent third-party sampling agencies. In addition to the Central Institute of Mining & Fuel Research (CIMFR) and Quality Council of India (QCI), two more agencies, SGS India Private Limited for power and non-power sectors and Mitra S K Private Limited for power sectors have been roped in as third-party agencies.
Coal India Limited (CIL) has done a commendable job in improving the coal quality through some key initiatives such as mobile crushers, procurement of online ash analysers, first-mile connectivity, etc. Such better governance of quality coal and grade conformity through third-party sampling methods has enhanced the quality from 65 per cent in the April to March 2021 period to 69 per cent for the April to November 2022 period.
The government is also considering the gasification of coal significantly. This will enable India to scale down its energy imports and help meet the CoP-21 Paris Agreement commitments.
To realise this objective, CIL has signed pacts with Bharat Heavy Electricals Limited (BHEL), Gas Authority of India Limited (GAIL), and Indian Oil Corporation Limited (IOCL).
The current geopolitical situation is also favouring the move towards exploring domestic resources. In the wake of the Russia-Ukraine war and sanctions on Russian coal, many countries turned to Australia for high-grade coal. With Australian coal prices skyrocketing, there was a steep drop in shipments to India from Australia in the CY 2022, witnessing a close to 50% decrease compared to a year ago. There was a significant decline in the purchase of 5500-grade NAR coal, although larger parts of Asia continued to do business with Indonesia.
India has a vast domestic market with significant consumption of coal from power and many other sectors. Relying on imports, wherein the market situation nowadays is volatile, can tighten the purse strings, making it obvious that we need to find self-reliance.
Can India replace imported coal with what is available domestically? Market analysts opine that it can, but with further improvements in domestic supplies and railway logistics. Considering that there has been a rebound in captive production and the coming to age of private commercial mines, there is a better chance of fulfilling this vision.
India's earlier efforts to reduce coal imports during the regime of Shri Manmohan Singh's UPA II and later when Shri Narendra Modi, the current Hon'ble Prime Minister of India took over, had fallen flat. India has a vast domestic availability of coal. However, the failure to convert this asset into a productive one ensured that the country met its needs through imports. The fall in global commodity prices during the previous decade also led to buyers favouring cheaper imports.
The pandemic and the ongoing war altered this process, and once again, business entities began coming back to domestically produced coal. With private mines beginning production, we may see a welcome change. Much also depends on the railways since that is a more cost-effective mode of transportation than transporting through roads.
Increased availability of rakes will ensure seamless transportation from one region to another, and if we get more dedicated rakes, that will help immensely. This, coupled with adequate mining, will help replenish stocks and bring down shortages in the market. India could rewrite history and open a new chapter eventually paving the way not only for healthy domestic consumption from what is available indigenously but also for exploring overseas markets significantly.
(Mr. Pradeep Kaimal is a Delhi-based energy journalist with Indoen. He can be reached at pradeep.kaimal@hotmail.com.) ■□■