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India’s coal appetite dwindles

8th February 2016

By: Ajoy K Das

Creamer Media Correspondent

  

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KOLKATA (miningweekly.com) - Green shoot pointers like the growth, or decline, in thermal power projects and the rapid upscaling of renewable-energy projects indicate that India’s appetite for coal is dwindling.

Even as domestic coal production rose, moving from a shortage towards the surplus zone, growth in new thermal power projects was showing a decline for the first time in the last three years.

According to data sourced from government departments, growth in new installed thermal power capacity was recorded at 8.78% in 2015, down from 8.99% in 2014 and 12.48% in 2012.

In sharp contrast, growth in new capacity in the renewable-energy sector was up to the highest level ever at 18% during 2015.

A senior official with the country’s largest power producer, NTPC Limited, said that the “pipeline of new thermal projects has completely dried up” and "no new plant are scheduled to come on stream in 2016”.

He said that, at the earliest, in 2018/19, 10 000 MW of new thermal capacity could come on stream in the form of ongoing projects delayed by varied reasons such as conclusion of fuel supply agreements, environmental clearances and/or scrimping of funding options by project promoters.

Ultra mega power projects (UMPPs), planned by the government were also turning out to be “pipe dreams”, with no such new projects put up for bidding since 2014. Even UMPPs put up for bidding in 2014 had all fallen through with all successful bidders subsequently withdrawing from the projects, he added.

In sharp contrast, in renewables, India was poised to commission 2 000 MW of solar power between January and March 2016, equal to the total generation capacity added in the full year of 2015.

While the impact of these trends in the power generation sector on medium- and long-term coal demand consumption patterns was not readily available from government departments, current empirical data indicate that the ‘coal rush’ in consuming industries had eased, giving way to stockpiles at both the producer and consumer ends.

Coal India Limited accounted for over 80% of domestic supplies - notching up 9% production growth so far in the current fiscal and expecting to close the year on March 31, with 550-million tonnes of coal - and was current saddled with unsold pithead stocks of 40-million tonnes.

Thermal power plants across the country were carrying a combined stock of 32-million tonnes of coal as of January 2016, up from 12-million tonnes during corresponding month in 2015.

The lack of takers for coal was also having a spillover impact on allied infrastructure sectors such as the government-owned and operated Indian Railways (IR).

IR had during 2015/16 projected additional freight traffic of 85-million tonnes on the total freight handling of 1.10-billion tonnes achieved in the previous fiscal period, largely banking on ferrying an additional 46-million tonnes of coal.

However, IR freight traffic was now not expected to grow by more than 1% during the year, largely resulting from the sharp fall in coal handling as thermal power producers with high fuel inventories were not making bookings, the official said.

Edited by Esmarie Iannucci
Creamer Media Senior Deputy Editor: Australasia

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