-ISSUES AND CHALLENGES

Gopal Prasad, Regional Director CMPDI, Asansol

INDIA-SOCIO-ECONOMIC SCENARIO
1200 million people - Second-largest population after China

Impressive annual GDP growth averaging 7.6% from 2000 to 2007 and around 8 % since then

Among top five countries of the world in terms of absolute GDP, based on purchasing power parity (PPP)
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INDIA-SOCIO-ECONOMIC SCENARIO
(Contd.)

BUT.. On per-capita income basis - well behind other fast-growing nations Human development index Very poor Poverty still remains a major challenge.
Per capita electricity consumption (779 KW) far below the world average (2500 KW) Nearly 60 crore Indians do not have access to electricity

WHAT NEEDS TO BE DONE

Must maintain Economic growth of 8 % to 10 % over the next 25 years to eradicate poverty and meet human development goals And to achieve sustained growth Growth of Power Sector is paramount because: Electricity a basic human need and economic indicator Electricity - Critical infrastructure on which the socio-economic development of the country depends
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NATIONAL ELECTRICITY POLICY OBJECTIVES Access to Electricity To be made available for all households Availability of Power - Demand to be fully met by 2012 Per Capita Electricity Ensuring Per capita availability of electricity over 1000 units by 2012.
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INDIAN POWER SECTOR

One of the largest and most important industries in India fulfilling the energy requirements of various other industries. One of the most critical components of infrastructure affecting economic growth and the well-being of our nation. Significant progress after Independence 1362 MW in 1947 to 190592 MW (Feb, 12) 140 fold increase in 65 years Per capita consumption of electricity from 15 kWh in 1950 to about 779 kWh in 2009-10 about 52 times.
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PRIMARY SOURCES OF POWER

Thermal Power65.4 % of total installed capacity
Main raw material used is coal around 84.5 % of thermal power generated using coal and rest (14.5 %) by using Gas and Oil

Hydro Power20.4 % of total installed capacity

Hydro power generation potential worth 1,50,000 MW Only 25 % harnessed till date share of generating capacity declined from 34 per cent at the end of the Sixth Plan to 20.5 per cent at the end of the eleventh Plan.

Nuclear Power2.5 % of total installed capacity

Heat sourced from nuclear reactors is used

Renewable Energy Sources11.7 %

Renewable sources like sun, wind, biomass Great potential to contribute to our energy security and reducing green-house gas emissions 7 Among top 5 largest wind power generators in the world.

PRESENT INSTALLED CAPACITY

All Thermal Power Nuclear Hydro RES India Coal Gas Oil Total MW 105437.4 18093.9 1199.8 124731 4780 38848.4 22233.2 % 55.3 9.5 0.6 65.4 2.5 20.4 11.7 Total
190592.6

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POWER GENERATION
798949.5 Million Units up to Feb-12 against the target of 855000 Million Units for 2011-12 Energy deficit of 11.1 % and peak demand deficit of 12.1 % during February-2012.
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PROJECTION OF COUNTRYS ELECTRICITY DEMAND - IEP REPORT

Year Projected population (million) 1200 1275 1347 1411 1468 Projected demand of Electricity Target for Total 2011-12 Peak Capacity Electricity Demand (GW) (Billion KWh) (GW) 1167 168 233 Capacity192 1687 250 337 Giga Watts 2438 372 488 Generation 3423 522 685 880 Bl. Units 4806 733 960

2011-12 2016-17 2021-22 2026-27 2031-32

Power generation to grow at an average rate of not less than 6 % in years to come
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COAL TO REMAIN AS MAINSTAY

Indian power sector heavily dependent on coal for meeting its power generation targets Consumes about 66 % of the coal Consumption (Year2010) Million Tonnes % Power 372 65.8 Steel 41 7.2 Cement 26 4.6 Others 127 22.4 Total 566 100

Above trend to continue in future It is estimated that Coal would account for 56 % of installed capacity in 2030
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POWER COAL DEMAND-SUPPLY GAP Most of the recent incremental generation capacity additions - coal based Future Scenario - to remain unchanged
IX Plan (Actual) Incremental capacity 19119 addition (MW) Coal Based (MW) 7930 X Plan (Actual) 20950 XI Plan (Likely) 52000 XII Plan (Potential) 80000

8575

35000

62700

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POWER COAL DEMAND-SUPPLY GAP

Contd.

Trend over the years - gap between demand of coal and its indigenous availability is increasing resulting into increased volume of coal import
Period Coal consumption By TPPs (MT) 300.561 322.437 346.543 360.845 377.875 292.652 Total Coal receipt by TPPs including import (MT) 301.417 321.433 349.754 367.652 380.336 292.370 Import of coal by Power Sector (MT) 7.780 8.067 14.190 23.230 30.302 33.251

2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 (up to Dec-12)

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POWER COAL DEMAND-SUPPLY GAP

Contd.

Gap between demand and supply of thermal coal is showing increasing trend. Besides Power, Coal is also required by the other industrial sectors of the Country. Projected Demand Supply Gap : As high as 943 MT in 2031-32
XI Plan (2011-12) (Target in MT) XII Plan (2016-17) (Projection in MT) XIII Plan (2021-22) (Projection in MT) IEP (2031-32) (Projection in MT)

Demand of Coal Domestic production Gap

696.3 554.00 142.03

980.50 795.00 185.50

1373.00 950.00 423.00

2343.00 1400.00 943.00

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SECURED COAL SUPPLY FOR POWER SECTOR WAY FORWARD

To achieve the objective of secured supply of coal, effective management of both-the supply side and demand side of Coal - is of paramount importance. Supply side comprises coal resources augmentation, production and procurement of coal and movement of coal from the source to the Power Plants. Demand side of coal is represented by conversion, distribution and utilization of electricity.
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MANAGING THE SUPPLY SIDE

Augmentation of Coal resources

Type of Coal Coking Coal Non-Coking Coal Tertiary Coal Grand Total Proved (MT) 17669.03 95738.76 593.81 114001.60 Indicated (MT) 13703.32 12368.44 99.34 137471.10 Inferred (MT) 2101.91 31488.11 799.49 34389.51

(GSI Figures)

Total (MT) 33474.26 250895.31 1492.64 285862.21

Geological hard coal resources of 286 BT, but only 40 % proven Experts estimate that only 21% of the inplace resources can be recovered (inplace resource to mineable reserve ratio of 4.7:1) Recoverable coal reserves, thus, about 58.6 BT. Thus, urgent need to bring inferred and indicated resources under proven category by increased rate of detailed exploration Prop up the rate of promotional drilling for augmenting the overall resource base Introduce modern techniques for achieving higher exploration rate.
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INITIATIVES TAKEN
CIL in association with GSI, MECL and private drillers has upped drilling performance Aim - to increase resources in proved category and add new resources through promotional drilling. Drilling targets increased from 520000m in FY-10 to 610000m in FY-12. Going for adoption of modern exploration technologies for rapid delineation of resources. Efforts are being made towards classification of resources as per UNFCC code.

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MANAGING THE SUPPLY SIDE (Contd.)

Enhancement of Indigenous Coal production Envisaged targets

Sources 2011-12 2016-17 2021-22 IEP (2031-32) CIL (MT) 447 615 650 SCCL (MT) 51 57 63 Captive Block owners and others (MT) 56 123 237 Total (MT) 554 795 950 1400

Indigenous coal production from primarily three sources CIL, SCCL and Captive Block Miners and others. Limited scope of augmenting coal output from SCCL Onus on CIL and captive Mining. 17

MANAGING THE SUPPLY SIDE (Contd.) CHALLENGES BEFORE CIL Growth from 70 MT in early 1970s to in excess of 400 MT at present Stagnating in recent years
Year FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11

MT

324

343

361

379

404

431

431

Reasons Problems of Land acquisition Delays in obtaining Environmental Clearances Law and Order problems Low Productivity
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Problems of Land acquisition

Biggest bottleneck for CIL in achieving targets Projects delayed due to non-acquisition of land Against the target of 62000 Ha of land during XI Plan, acquisition of only 6000 Ha In-ordinate delays in acquisition of forest land multiple State and Central Government agencies Delays in acquisition of Tenancy land non-availability of ownership records non-cooperation from local administration absence of uniform R&R policy
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Delays in obtaining Environmental Clearances Normative time for obtaining EC is 2-3 years, but on average it takes 5-6 years In the FY-11, 154 projects (210 MT total capacity) of CIL were waiting for environmental clearance. Augmentation of production from existing projects also requires fresh EC delay in expansion Projects
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Law and Order problems

A good chunk of CILs mining areas fall in Naxalaffected belts Frequent Bandhs affecting coal output adversely Land acquisition in these areas is doubly difficult.

Low Productivity
Production from the UG mines showing downward trend over the years UG mines are operating with very low productivity. Mass production technology adopted in very few mines. Many small Open cast mines also operating with very low capacity HEMMs and low efficiencies
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INITIATIVES TAKEN BY CIL

91 projects (ultimate capacity 207 MT) identified in X Plan of which 86 approved and underway Expected to contribute 100 MT in FY-12 76 projects (ultimate capacity 178.78 MT) identified in XI Plan approved and underway Adopting latest technologies in its mines going for high capacity equipment in Open Cast mines. Introduced high wall miner to win the coal blocked beyond the ultimate pit boundary. Introduced independent truck dispatch system in OCPs Introduced continuous miners in several UG mines aiming to introduce mass production technology for UG operations. Invited bids for private participation in winning coal in 22 abandoned mines.

INITIATIVES TAKEN (Contd.)

Efforts to identify sources of coal in the foreign countries acquired two virgin blocks in Mozambique Invited EOI from global operators for selection of strategic partners for overseas operations Efforts for long term contracts with foreign sources of coal with an aim to ensure secured supply of coal on sustainable basis Envisaging buying stakes in foreign coal companies for obtaining coal supplies. Strengthening coal evacuation infrastructures MOU with RITES for upgrading existing Sidings and also for launching new rail line projects Proposal to Railways for allowing self owned railway wagons Proposal to build three new rail links totaling 350 km to connect interior coal fields JV with Shipping Corporation for handling import of coal and with Indian Railways to transport imported coal to customers doorstep. Constant touch with various Ministries and State/local administration for statutory clearances in time and to obtain the assistance of local/state administration, wherever needed.
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CAPTIVE MINING CHALLENGES

Coal sector has been one of the most regulated sectors of Indian Economy till 1993 Subsequently, captive coal mining has been allowed in several sectors including Power generation aim was to augment domestic coal production. Captive mining did not perform, as envisaged Out of 208 allotted blocks, mining could be started in only 26 blocks till date Likely contribution around 50 MT against targeted 100 MT (FY-12) Reasons for poor performance Lack of serious efforts by several block allottees towards development of allotted blocks leading to de-allocation of blocks Land acquisition problems Employment claim of land losers irrespective of quantum of land Resistance of PAPs against shifting to rehabilitation sites Scarcity of land for rehabilitation sites, Demand of exorbitantly high rate of land compensation Failure/ delays in obtaining Environmental and forestry clearances Delay in issuance of mining leases by State Governments
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CAPTIVE MINING WAY FORWARD

Captive mining will have to come of age in future Output from these blocks needs to be enhanced from a level of around 50 MT in FY-12 to 123 MT in FY-17 and 237 MT in FY-22. Some of the required reforms/steps for augmenting the coal output from captive blocks may be: Allocation to serious players newly introduced system of competitive bidding likely to eliminate non-serious entities To create market mechanism for surplus coal produced Adopting single window system for statutory clearances Formulating an effective and uniform Land Acquisition and R & R Policy Provision of cost effective coal evacuation infrastructure Support from State Govt. agencies 25

MANAGING THE SUPPLY SIDE (Contd.)

Import of Coal
Gap between demand of Coal and indigenous availability of power coal is showing increasing trend. Besides Power Sector, Coal is also required by the other industrial sectors of the Country. In view of the projected demand of coal and anticipated indigenous availability, the demand-supply gap is likely to get wider:
XI Plan (2011-12) (Target in MT) XII Plan (2016-17) (Projection in MT) XI Plan (2021-22) (Projection in MT) IEP (2031-32) (Projection in MT)

Demand of Coal Indigenous availability Gap

696.3 554.00 142.03

980.50 795.00 185.50

1373.00 950.00 423.00

2343.00 1400.00 943.00

Up till now, the demand-supply gaps were not very wide and therefore have been managed by import of coal at a relatively smaller scale. However, to meet the burgeoning coal demand, there is no other way but to go for the import of coal in a comprehensive and planned manner.
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MANAGING THE SUPPLY SIDE (Contd.)

Import of Coal
Issues involved
International coal market is facing severe competition owing to spurt in coal demand from all corners. Rising demand of coal in the international market to lead to increased price volatility. Present capacity of Indian ports not enough to handle the imported quantity Total coal handling capacity of 81 MT against coal traffic of 92 MT (FY 09) idling of vessels Entry of cape size vessels restricted owing to lower draft of Indian ports requiring more number of trips of small size vessels Proposed capacity addition of ports will not be sufficient to handle the projected volume of coal import.
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INITIATIVES TAKEN AND WAY FORWARD

To ensure sustainable import of coal at reasonable price, assured coal supply sources need to be located either by entering into long term agreement with foreign suppliers or by owning mines in a foreign country or by combination of both. Indonesia, South Africa and Mozambiqe would be ideal countries to approach for the sustainable import. Urgent need to ensure coal supply through import through bilateral Government level understanding between the two countries. Indian ports will have to be upgraded to meet the increased volume of coal import. Time has come to develop a modern and exclusive deep sea Coal terminals accompanied with dedicated/captive cargo. Besides augmenting the cargo handling capacity of ports, it is also essential to enhance the evacuation capacity for the outward movement of imported coal from the port to its destination. Government has taken a welcome decision in the Budget-2012-13 to exempt the import of coal from custom duty.
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MANAGING THE SUPPLY SIDE (Contd.)

Strengthening logistic infrastructure

Ironical that at on one hand Power Plants are facing shortage of coal and on the other hand CIL has a pit head stock of around 50 MT (as on 1.1.12) lying unutilized. Mismatch clearly indicates that the countrys coal evacuation infrastructure is not capable enough to handle its entire coal production. The evacuation infrastructure has failed to keep pace with coal production constant increase in the pit head stock from 27.20 MT on 01.01.07 to 49.16 Mt on 01.01.12. Indigenous Coal production to rise constantly and may reach the level of 1400 MT by 2030. Also, about 900 MT coal likely to be imported (2030) to meet the Countrys projected energy demand. Thus, role of coal evacuation infrastructure is of paramount importance.

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WAY FORWARD
Major chunk of coal movement by Rail (49 %) [ Road (27 %) and MGR (19 %)] Scope of augmenting evacuation capacity through roads is limited. MGR is an area specific mode of transport cater to a limited area Hence, burden of coal transportation to be borne primarily by the Railways Coal traffic by rail mode to surpass 900 Million tonnes by 2030. Need of dedicated rail lines special NS & EW corridors may have to be considered by railways. Introduction of lighter wagons Will reduce the high net to tare load ratio. A good option is to use Inland Water Transport for Thermal Power Plants located near the river basins eg Farakka & Kahalgaon Super TPS Emphasis on coal beneficiation will result in enhanced thermal efficiency of power plants and also reduction in hauling need by 6-10 %. Need to upgrade sidings and associated loading equipments, Loading & unloading infrastructure needs to be fully mechanized Aerial ropeway, Conveyor belt and Merry-Go-Round rail systems etc. need to be created and re-vamped wherever necessary
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MANAGING DEMAND SIDE OF COAL A VIABLE OPTION OF REDUCING DEMAND-SUPPLY GAP

The Demand side of Coal can be monitored and managed by focusing primarily on three key areas namely:

Improvement in conversion efficiency of TPPs

Average conversion efficiency - 30 %, lower than world average of 36 %. Results in increased specific coal consumption - more CO2 emissions Steps needed to improve the efficiency of thermal power plants, which in turn would ensure reduced coal demand:

Maintenance of existing TPPs

Adopting high standards of plant maintenance, to maintain efficiency for longer periods.
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MANAGING DEMAND SIDE OF COAL A VIABLE OPTION OF REDUCING DEMAND-SUPPLY GAP contd. Design of new Power Plants
Adoption of supercritical (SC) and ultra-supercritical (USC) steam conditions for new generating plants, in conjunction with modern steam turbine designs key to improved plant efficiency Coal consumption is almost half in comparison to conventional sub-critical power plants.

Drying of coal to reduce moisture content

High moisture content of coal reduces the efficiency of Coal-fired plants up to five percentage points Adoption of efficient coal-drying technology using either waste heat or low-grade steam

Reduction of Ash percentage

Causes loss of heat Results in reduced conversion efficiency High ash content coal should be beneficiated prior to feeding to the power plants.

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Checking the Transmission and distribution losses Transmission and distribution losses are still hovering around 30 % a staggering loss. On the other hand such losses are as low as 4 % in Japan, South Korea Even many developing countries have managed to peg this loss under 15 % Urgent need to curb such losses, which in turn would result in reduced coal demand.
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FEW MORE STEPS FOR REDUCING THE DEMAND OF COAL

Judicious use of electricity, use of energy efficient home appliances, conservation of power etc. Electricity saved is equivalent to electricity generated. More emphasis on other sources Nonconventional sources, Nuclear power, Hydel power, gas based power etc. Developing alternative sources of energy such as CBM, CMM, Shale gas, Coal to liquid etc.
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Conclusion India has the secondlargest population after China, with an estimated 1200 million people. Although Indias annual GDP growth has been impressive in recent years, but human development index has not improved. Poverty still remains a major challenge. If India has to eradicate poverty and meet its human development goals, it needs to sustain an economic growth of 8 % to 10 % over the next 25 years for which proportionate growth in power sector is a must. Power sector has a very important role to play in achieving the desired growth rate in a sustainable manner. To meet the power requirements, the sector will have to add at least 20-30 GW of generation capacity on yearly basis. Indian power sector is heavily dependent on coal for meeting its power generation targets. About 66 % of the coal in the country is presently consumed in the power sector (Year-2010). At present about 55 % of total electricity production in India is from Coal Based Thermal Power. It is estimated that Coal would account for about 56 % of power generated in India even in 2030. Thus coal is going to remain mainstay for achieving the Power generation targets for many years to come. At present, India is unable to meet its thermal coal requirements from indigenous sources. The gap between the demand of thermal coal and indigenous supply is gradually getting wider. During the current financial year 2011-12, the anticipated gap between the requirement and availability of domestic coal has been estimated around 54 MT, which is being made up by import of coal. In view of the projected demand of coal and projected availability of indigenous coal, the demand-supply gap is bound to get wider in the coming years. It, therefore, becomes extremely important for the growth of countrys power sector to not only ensure development and availability of domestic coal resources but also look for import of coal in a sustained manner to fill up the demand-supply gap. However, there are various issues and challenges, which need to be tackled for a secured supply of coal to the country in general and power sector in particular. There is immediate need for initiating multipronged corrective actions to overcome the various issues and challenges, which are coming in the way secured supply of coal to the industries. Some of the suggested actions are augmentation of indigenous coal resources, ease and clarity in land acquisition process, effective and time bound Environmental & Forestry clearance process, emphasis on increased productivity in mines, adoption of modern technology-both in mining as well as power generation, stress on coal beneficiation, effective action towards securing import of coal from reliable foreign sources in a sustained and cost effective manner, modernization of coal evacuation infrastructure, laying emphasis on increased generation efficiency, checking T & D losses etc.

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