The multi-modal logistic nightmare stems from the skewed geography of coal mines located mostly in the eastern and south-central states against coal-based thermal power plants spread out in other regions of the country.
Notwithstanding the malaise, some of the burning issues in the country also complicate the logistics issue. A flash strike in the naxal-infested region of Talcher in Orissa or a token strike in Sringaneri in support of Telangana agitation of Andhra Pradesh can paralyse the entire supply lines from the mining belt to nearby shipping ports from where coal reaches thermal power plants in the country.
Nearly 50% of coal transportation in the country is handled by railways, but there is no dedicated rail corridor to transport coal from the mines to power plants. Existing railway lines are almost reaching their saturation points. Coal companies like Coal India Limited (CIL) and Singareni Coal Mines depend upon rail wagons to haul their produce to the power stations.
For instance, out of its 431.32 mt coal production per annum, Coal India moves 161.90 MT on rail wagons and it takes nearly one week on an average to move a rake from mine to the power plant. While power plants need more coal to sustain their energy production, it is difficult to ship additional capacity to meet the burgeoning demand, says K Battula, regional sales manager, CIL.
He adds, The constraint is in the form of lack of capacity and augmentation in the rolling stock. Expanding wagon haulage is a major issue in places like Talcher district of Orissa, where Coal India evacuates about 100 mt in a year from the mine, but can ferry only 30 to 35 rakes a day to the nearby Paradip port.
Similarly, road lines are turning to be unpredictable as long lines of trucks that ship coal from excavation sites to rail terminals face temporary disruptions when villagers on the transit route resort to a flash road roko to highlight any local issue. The distance between rail head and the pit head of mining site is 10-12 km in Talcher coal block. When villages enforce road blockades, it results in temporary supply disruption. There are nearly 170 districts in coal rich states of the country, where coal mining companies face law and order issues in carrying out their operations, he adds.
Shedding more light on how the skewed geography is contributing to logistic bottlenecks in sending coal to the power stations, Battula says, Coal is available in states like Jharkhand, Madhya Pradesh, Maharashtra, Orissa and Gujarat. The Tamil Nadu State Electricity Board, which operates thermal power plants in places like Tuticorin, Mettur and Ennore, brings coal from West Bengal coal fields operated by Eastern Coalfields. The distance between the coal fields and Haldia port is about 250 km. From Haldia port it is about a stretch of 3,000 km to reach the power stations in Tamil Nadu.
He adds, Similarly, Karnataka Power Corporation buys coal for its Raichur power plant from Talcher coal block. The land to port distance between Talcher and Paradip port is about 175 km. From there the coal consignment is transported from Paradip to Chennai port by ship. Again to be ferried by rail wagons to Raichur, which covers a distance of about 470 km. One could call this as the multi-modal logistic nightmare of dispatching coal from road to rail, rail to port and port to power plant by rail or roadways.
Ahamed Buhari, founder president and CEO of Coil and Oil group, Coastal Energy, slams the lack of modern port facilities in the country for stemming the possibility of docking bulk carriers like cape-sized ships reaching the Indian shores. While Indian companies are aggressively acquiring coal assets in Australia, South Africa and Indonesia, only two Indian ports including greenfield Karaikal port and Mundra port are capable of docking the bulk cape-size vessels that have lading capacity of about 2,00,000 tonnes. If the infrastructure of our major ports is ramped up to receive cape-size carriers, India could explore newer markets for coal imports including countries like the US, he says.
Though India has about 13% of the global coal reserves estimated to be at 275 plus billion tonnes, it has achieved a production average of only 450 mt per annum, says Ranjit Pendurthi, executive director of the diversified Archean Group. Though the country has nearly 36 billion tonnes of coal reserves, we face major challenges like logistics, mining, forest clearance and environmental clearance. Also we dont have in-house support for stock piles and corridor connectivity to move it to the power stations across the country when coal is mostly concentrated in the eastern and south-central parts of the country, he says.
Stakeholders say that port modernisation is the key as India is expected to overtake Japan in coal import. The country is likely to buy around 120 million tonne imported coal by 2012. While the current demand stands at 713.24 million tonnes, the supply hovers around 629.91 million tonnes, signalling that India needs to put its port and road infrastructure in order to meet the shortfall by imports, says Pendurthi.
Exploring newer coal blocks abroad for long-term fuel security is a must in the wake of challenges in Australian and Indonesian coal export markets. As is the case with naxal-backed Indian tribal resistance to activities like mining, the aborigine population in Australia, too, has raised the issue of land ownership in areas of coal mining, he says. The aborigines vehemently oppose the idea of mining coal or any other natural resource mining as the activity badly impacts the existence of the centuries old tribal rock art of the country. Other than aborigine issue, the Australian government is strongly mulling introducing carbon tax on commodities like coal, which is likely to push up the competitive cost of buying coal from that market.
He adds, We have a different scenario in Indonesia, where the archipelago is itching to benchmark the coal price to international market rates that could quash the private deals done by overseas companies with the coal mine owners in the country. In addition to this, the national government over there intends to impose royalty and export duty to meet domestic market obligation.
It is no matter of surprise that Indonesia, which is a power-deficit country, wishes to moderate the export of coal by introducing comprehensive legislation termed as the New Mining Law. The law is aimed at slapping stringent regulations in the mining sector in addition to the gain on return of revenue to the government coffers in terms of tax and export duty, he says. In this odd scenario, we need to beef up the receiving infrastructure at Indian ports where it is strengthened and modernised to handle bulk carriers from any part of the world other than these two challenge-ridden markets.
Sharing the bitter experience of Archean group in building the receiving port infrastructure within the country, he adds that land acquisition is a major challenge in developing the required port infrastructure. The amount of hardships we face in acquiring land for shipping business is a tell tale of woe. It is now hard to acquire 100 acres of land due to anti-acquisition demonstrations and stringent environment clearance norms laid down by the union environment ministry. Confronting opposition from various quarters, we could only add four new ports in the last 15 years. We need to ease the restrictions and create enabling ambience for the development of critical port infrastructure within the country, he emphasises.
While on one hand the coal demand is shooting up, on the other, the much required coal handling infrastructure is not keeping pace with it. In the 11th Five Year Plan, the coal demand is expected to touch 9.5% against the requirement of 4.9% of the previous plan. It is estimated that during the forthcoming 12th plan, the coal demand would jump to 900-1,000 million tonnes. So, to cater to the long term needs, port and road logistics need to grow to handle 200 million tonnes that may have to be shipped into the country.
Sounding a red alert on impending coal crisis tripping the plant load factor of thermal power plants in the country, a monthly report by Central Electricity Authority(CEA) for the month of September this year says that the coal requirement stood at 31.5 mt. However, only 24.9 mt of coal was made available to the thermal power stations during the review period. Till the end of September, as many as 31 thermal power stations had critical stocks including 21 stations with super critical stocks (stocks for less than four days). The main reasons for coal shortages are inadequate receipt of coal and transportation problems.
During the current financial year, the anticipated gap between the requirement and availability of domestic coal was estimated at around 54 mt. Out of 54 mt, 35 mt of coal was to be met through import of coal, for which all the utilities have been advised to take necessary actions and the rest 20 MT of coal was the requirement of power plants designed on imported coal, adds the CEA monthly report.
The Plant Load Factor (PLF) of coal/lignite-based plants decreased by 2.8% during September 2011 and 0.82% during April-September 2011 over the same period last year, mainly on account of coal shortages, lower schedules from beneficiaries and the closure of operation of some of the vintage thermal units after commissioning of new thermal units of higher capacity.
Growth in coal based-generation is constrained due to 79% materialisation of the requirement of coal. Loss of generation of about 0.881 bu (billion units) due to shortage of coal during the month of September alone has so far has been reported. Loss of generation due to shortage of coal during April-September of about 3.362 bu (as per the information received so far) has been reported. Loss of thermal generation due to poor quality/ wet coal problem during April-September is estimated to have been 1.42 bu, sums up the CEA report.
Whether inland water logistics would provide the much required reprieve in place of rail and road lines remains a moot question. According to Inland Water Ways Authority of India (IWAI), inland waterways criss-crossing states are the competitive source for coal transportation from mines to power plants. An estimate of IWAI says that 1 litre of fuel could move 105 tonnes of consignment when compared to 85 tonnes of rail and 24 tonnes by road. It is calculated that one barge or flatboat is equal to 15 rail wagons in terms of its payload capacity.
If overhauling the transport infrastructure and foraying into inland waterways could redress the logistical bottlenecks, de-risking fuel supplies is what the government is envisioning in the long run. Taking serious cognisance of shortcomings in the non-renewable power production process, the power ministry has embarked on a national solar mission to add 1,000 MW to the national grid by 2013. Increasing solar power generation and clearing the decks to hydroelectric power under renewable energy portfolio would substantially bring down the fuel mix requirement in the overall energy basket.