KOLKATA (miningweekly.com) – Major producer Coal India Limited’s (CIL's) plan to establish mega thermal power plants at its pitheads would be subject to decision by the government that assumes charge after next month's national elections.

According to officials in the Coal Ministry, opinions were divided within the present government on whether the coal miner needed to diversify into power generation or focus exclusively on increasing coal production, considering the slippages in targets and the shortage of coal in domestic markets.

Plans for entering thermal power generation would be a major policy decision for the government-owned coal miner and considering that decision-making within the present government was in a limbo ahead of the national elections, the Coal Ministry was not in a position to take a stand on the issue and would leave it for the next government to make a call on it, the official added.

CIL had drawn up plans to construct thermal power plants with aggregate installed capacity of 1.6 GW by 2016, with the power stations to be located near its coal pitheads, including one near its coal mines in the eastern Indian province of Odisha.

The miner pleads its inability to increase production from existing mines or develop new blocks in the absence of infrastructure and railway connectivity, which would prevent evacuation of coal even if production from the mines were to be increased.

CIL maintained that the potential for increasing coal production by as much as 300-million tonnes a year was being prevented by a lack of railway connectivity to evacuate coal and transport it to thermal power plants.

According to the miner, the lack of transport infrastructure could be circumvented if the miner, in collaboration with joint venture partners, was to establish thermal power projects close to pitheads thereby eliminating the need to transport coal to distant power plants.

However, a section of the Coal Ministry held that considering rising dependency on imported coal, the miner should first ensure supplies to domestic thermal power generating companies before venturing into power generation itself.

CIL for its part, has argued that in addition to countering the miner’s inability to increase production owing to lack of infrastructure and transport logistics, turning around delays in the granting of mandatory mining approvals and diversification to power generation could transform this vicious cycle into a virtuous cycle. At the same time pithead power generating plants would ensure lower cost of production.

However, given the political uncertainties amid the few months the present government had left in office, it was not possible to objectively weigh the pros and cons of the miner’s proposal, the official added.