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Ashok B Sharma
New Delhi: In a farsighted approach, the Union coal ministry is contemplating on policy changes to allow more of effective private sector participation in the coal sector with a view to bridge the widening demand-supply gap of this commodity owing to scheduled expansion of power projects in the Tenth Plan Period.
The ministry noted that the new policy measures introduced by the government in 1993 to permit captive mining has only limited success. At the end of the Ninth Plan, the total estimated production from captive sources is not expected to increase beyond 2 million tonne per annum.
The ministry is of the view that the existing companies are in a position to meet the coal demand in the country in the remaining period of the Ninth Plan. Also the level of imports in the remaining period of the Ninth Plan is likely to remain same at 17 million tonne per year, including 10 million tonne of coking coal being presently imported by the steel industry.
The Planning Commission has in consultations withconcerned ministries has tentatively prepared demand for coal in the Ninth Plan period. But there are certain doubts about the estimates prepared by the Planning Commission and consequently has not been formally settled. There is a wide variance in the demand estimates prepared by the Planning Commission and the coal ministry. The coal ministry stated that its estimates are more realistic whilst the estimates of the Planning Commission are optimistically high.
The total demand for coal in 1997-98 was project at 323.38 million tonne of raw coal and 6.80 million tonne of middlings.
The domestic production in 1997-98 was 294.64 million tonne of raw coal and 3.39 million tonne of middlings. In 1998-99, the demand was projected at 325.38 million tonne of raw coal and 7.50 million tonne of middlings. In 1998-99, production estimates of 295.69 million tonne of raw coal and 5.7 million tonne of middlings has been projected. For the terminal year of the Ninth Plan in the year 2001-02, the Planning Commission has ademand of 412.20 million tonne of raw coal and 7.70 million tonne of middlings whilst the coal ministry has placed the demand at 362.42 million tonne of raw coal and 7.70 million tonne of middlings.
The Planning Commission has estimated that in 2001-02, the total domestic production s likely to be 357.56 million tonne, whilst the ministry has estimated that it is likely to be only 344.82 million tonne. Thus, at the end of the Ninth Plan, the demand-supply gap would vary from 67.38 million tonne to 17.60 million tonne.
With the current trends of import in the country at 17 million tonne, the coal ministry is hopeful that its `realistic' estimate of demand-supply gap of 17.60 million tonne can be met without much difficulty.
Even in case the demand of power sector increases beyond the estimate of the ministry at 230.62 million tonne of raw coal and 5 million tonne of middlings, the ground stocks on March 31, 2001, with the coal companies which are estimated to be 27 million tonne will be sufficient tomeet the demand.Though the government has not yet constituted the working group for the Tenth Plan, the working group for the Ninth Plan has made some tentative projections for likely demand in the Tenth Plan.
According to this estimate the total demand for coal by the end of the Tenth Plan in 2006-07 is likely to be 653 million tonne, including 447 million tonne required by the power sector, 64 million tonne required by the steel sector and 142 million tonne required by other sectors. The domestic production of coal by the existing companies is projected at only 418.6 million tonne in 2006-07.
This demand estimate for coal by the power sector in 2006-07 would mean an increase of 216.38 million tonne over the `realistic' demand at the end of the Ninth Plan.
The power ministry on the other hand has indicated that they propose to set up power plants with an ultimate capacity of 32,500 MW of which 28,000 MW will commence by 2006-0.
The project would require an incremental coal of about 124 milliontonne.
The coal ministry and Coal India Ltd have pointed out that taking into account the slippage in the Ninth Plan, the linkages accorded so far and the problems of escrow accounts which is relevant for independent power producers (IPPs), the new capacity which will come up in the Tenth Plan would be about 10,000 MW with an incremental coal demand of about 45 million tonne.
Thus the demands corresponding to the above three projections of new power capacity respectively comes to 653 million tonne, 558.40 million tonne and 479.4 million tonne.
Taking the above projections into account the demand-supply gap at the end of the Tenth Plan will vary from 234.40 million tonne to 60.80 million tonne. While these figures are all tentative figures, they clearly bring out a large gap between production and demand.
Even at the most conservative estimate shows a deficiet of about 60 million tonne by the end of the Tenth Plan.
Demand for coal is a derived demand and is based upon the requirement of differentconsumers. About 70 per cent of the coal in the country is consumed in the power sector, 10 per cent in the steel sector and the balance in cement and other industrial sectors consisting of miscellanous industries and BRK industries. As a rule of thumb, 20 per cent of the volume of cement produced in the country is the requirement of coal. The demand from other consuming sectors such as BRK is not specifically assessed but is projected based upon pat trends of consumption and likely growth.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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