1. Advisory group: Open up coal sector to raise output

Advisory group: Open up coal sector to raise output

While the government has already kick-started the process of re-allocating captive coal blocks cancelled by the Supreme Court...

By: | New Delhi | Published: December 23, 2014 1:12 AM

While the government has already kick-started the process of re-allocating captive coal blocks cancelled by the Supreme Court to private and public firms and included  an enabling provision for allowing commercial mining by the private sector, a high-level advisory group has underlined the need to open up the coal sector for scaling up domestic production of the dry fuel.

The group, headed by Suresh Prabhu (now railway minister), also called for upgradation of state-run Coal India and its subsidiaries, including Central Mine Planning and Design Institute (CMPDI).  In its final report submitted to power and coal minister Piyush Goyal on Monday, the advisory group for integrated development of power, coal and renewable energy suggested  measures for enhancement of coal production in the in the short, medium and long term.

Some of the group’s recommendations have been instrumental in drafting the auction methodology for coal blocks, slated to resume later this week. The group has suggested measures for the auction process, coal linkage rationalisation and swapping of linkages. It has also stressed on the need for urgent action on providing coal linkages to power plants already commissioned, and likely to be commissioned by March 2015.
The group’s recommendations for changes to the Electricity Act, including separation of carriage and content in the distribution licence, has already been adopted — the Cabinet approved such a proposal a few days ago and the proposals may come up before Parliament in the Budget session.

The group also pitched for giving consumers the option to choose power suppliers with the objective of facilitating competition in power supply.
Once carriage and content are separated, there will be separate licences for the wire business and the actual supply of electricity — with a provider-of-last-resort facility. This could pave the way for open access for ordinary consumers.

Other recommendations include further strengthening of penal provisions with a view to improving quality of service, and grid discipline. The report also called for expediting reforms in the distribution sector with targeted actions, including privatisation or PPP (public private partnership) in distribution.

The group consisted of RV Shahi (former power secretary), Pratyush Sinha (former chief vigilance commissioner), Anil Baijal (former home secretary), Partho Bhattacharya (former CMD of Coal India), among others, as members.

On the renewable front, the report said solar and wind require large scale capacity addition which will not only balance the skewed power sector profile, but will also lead to price parity with conventional power due to economy of scale.

Suggestions
* The group has called for upgradation of CIL and its subsidiaries, including Central Mine Planning and Design Institute
* It has suggested measures for the coal auction process and linkage rationalisation
* It has stressed on the need for urgent action on providing linkages to power plants already commissioned, and likely to be commissioned by March 2015
* It has pitched for giving consumers the option to choose power suppliers and called for expediting reforms in distribution sector with targeted actions, including privatisation or PPP

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