The Planning Commission?s projection of import requirement of coal by the end of the 12th Plan period might further inflate global coal prices, which could push industry to tougher conditions.
Union coal secretary Alok Perti at a Mining Geological & Metrological Institute (MGMI) meet said the planning commission first projected 70,000 mw of coal based power capacity and 14,000 mw of gas based power capacity addition by the 2017 or end of the 12th Plan period. But given the condition of gas availability, the target of adding 84,000 mw by 2017 has been shifted to coal.
This requires an additional 360 million tonnes of coal, scaling up the entire coal requirement at 900 million tonnes by the power sector only at the end of the 12 th Plan period.
India?s total production of coal might jump to a maximum of 650 mt the rest has to be imported , Perti said.
He said the Planning Commission is projecting an over 100% growth in power capacity addition with the 11th Plan expected to end by adding 40,000 mw.
? Experience says that targets are always kept at the higher side, while achievements are much below the target,? Perti said. Reasonably the country might achieve 50% or a little more of the targeted capacity addition plan and so import requirement might not be as high as projected.
?International coal markets are already bad and these types of projections may make matters worse. Already we are buying coal from the foreign market at a higher price,? Perti said.
Spot price of Indonesian coal, which is mainly imported in India, is currently hovering between $ 115 and $120 per tonne, whereas recent contract prices have been negotiated at $90-$92 per tonne.
International coal prices have already gone up by an average 16-17% and was expected to further go up once fresh negotiations were made.
In fact, Indonesia?s energy resource ministry on Saturday has asked its country?s coal miners to renegotiate all contracts made in 2009 giving a strong indication that prices may further escalate.
Perti said the other way of getting imported coal at discounted rates could be through acquiring coal assets abroad. But government companies have got very limited success with respect to the private sector companies? success because procedural hassles consume too much time. ?Time is really a factor when we are looking for assets abroad and the government should see to it,? Perti said.
He said the country needed energy at an affordable price but that affordable price could not be below the cost of production. Many power utilities across the country were cutting down production, since the existing tariff did not support cost of generation, Perti added.