India Has A Century Worth Of Coal If We Need
It
Do we have a coal shortage? In absolute terms-no. But did
a lot of the thermal plants around the country let their coal stocks go below
even 5 days stocks-yes.
They did so, basing their demand projections on near flat
Covid induced demand last year. Maybe they were expecting a third wave as bad
as the second. Instead, the intense round of vaccinations, nearly 100 crore
people worth, has greatly assuaged the situation.
There is a reason for the hesitation. Electricity, once
produced, is a perishable commodity without expensive and high technology methods
of storage. The US has created over 25 gigawatts of strategic electrical energy
storage. But India has next to none, unless you count a few batteries. But we
do have a National Grid and Exchange. The trouble is, it buys at market rates
and sells its electricity to the highest bidder. This can upset contractual
rates and force electricity selling prices upwards.
Besides, the thermal generation units let this squeeze
happen every year post Monsoon. There is a dip in the mining of coal after the
rains till all the water can be drained. Still, dry coal stocks at the mines
are maintained at about 22 days demand. Coal India meets 80%, though many
thermal units have been importing a lot in past years.
Caught out by their own calculations, particularly in
Punjab, Rajasthan, Jharkhand, thermal power plants are scrambling to raise
stocks to 15 days need now to meet a sharp uptick in demand of more than 20% .
The manufacturing economy has woken up to the emphasis on
atmanirbhar, and opportunities based on at least partial relocations from
China. Other sectors of the economy too have perked up enough to produce the
highest growth forecasts in the world for this fiscal. Rural electrification
has increased consumption. GDP is headed to clock 9.5% growth this year
followed by another 8.5% growth on top of that next year as well. The IMF and
World Bank are saying so, and not our government statisticians.
Economics being a demand/supply game there are a few associated problems on the coal imbroglio that cannot be glossed over. The thermal plants owe the coal suppliers Rs. 20,000 crores in unpaid bills. Nevertheless, enhanced coal supplies are already at 1.62 million tonnes a day heading up towards 2 million tonnes a day post Dussehra, according to the coal minister Pralhad Joshi. The PMO has taken a quick supervisory interest, as it doesn’t want anything like this to damage the return to robust growth. The partially revamped and far more dynamic railways are moving vast tonnages around the country on an emergency basis.
The electricity distributing companies (discoms) also owe
the generating companies Rs. 1,60,000 crores in unpaid bills. Presumably, this
is because the governments of the States and at the Centre have not paid.
Private consumers have to pay if they don’t want to be cut off. Present firefighting
apart, the situation seems pretty precarious.
The political buck passing that is usual in such
situations has been countered rather well by the Centre in this instance with
ready facts and figures. The comparisons in the international media with China
are misplaced, because China is highly dependent on imports to make up the
deficit in demand. That it is in a financial bind right now is another matter.
In the broader context, India has the 5th
largest proven coal deposits in the world after the US, Russia, Australia and
China in descending order. Some accounts put India at No.4.These can last us
for 111 years at present offtakes, but even accounting for increased
requirements, it’s enough for at least a century going forward. And that’s
assuming no further discoveries of large deposits.
However, with concerns over pollution, scrubbing expenses,
environmental concerns, the Paris Accords, coal is regarded worldwide as a bad
old Victorian Industrial Revolution leftover. However, it would be a mistake for India to
not leverage a strength just to please the climate lobbies. Concern over global
warming may be real, but immediate fuel shortages and spikes in pricing are
more compelling.
This year coal prices have risen from $60 a tonne to $160
internationally. India has been the second largest importer of coal after China,
at about $16 billion to their $16.7 billion per annum, running neck to neck
with Japan in this. But not this year.
After this page break caused by rapacious international
coal prices, freight hikes and shipping congestion, India should be headed
towards export of coal. This, after meeting all its needs.
A revived Coal India is now producing 600 million tonnes
per annum but slated to produce a billion tonnes by 2023-24. Other coal blocks
have been auctioned. Commercial production of coal as opposed to the UPA era ‘captive’
mining handed out to industrial groups has been introduced.
Are there any real alternatives to coal? Alternate energy sources including
hydroelectric, solar, biomass, nuclear-both Uranium based with its erratic
supply, and the as yet non-player Thorium, have not done very much. Then there are wind, wave, gas, petroleum, and who knows, hydrogen
in the future.
For now, plentiful coal might be the main player for years
yet. At present it provides 70% of the
thermal based electricity, with all the other contenders put together
accounting for no more than 30%.
India has the largest reserves of Thorium in the world,
but has not been able to develop a workable Thorium based reactor to produce
electricity.
It may be political to create a fuss over perceived coal shortages just as there was a real one
for oxygen during the second wave last year. There may be some blackouts, and
load-shedding power cuts have already begun in some states. But it is a crisis
of our own making at best, and headed swiftly towards a solution. But having
said that, it is another misinformation gambit aimed at a 2022 election
scenario that is not going to fly.
(990 words)
October 14th, 2021
For: Firstpost
Gautam Mukherjee
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