Govt must address deep-rooted ills in coal, power sectors

India has a long way to go in providing electricity security to its people. Its per capita electricity consumption is still only a third of the global average. The coal-fired Thermal Power Plants (TPPs) contributed 72 per cent of the 1,490 billion units (BU) of electricity generated by the utilities during FY 2021-22, although they account for only 53 per cent of the total installed generation capacity of 400 GW.

The coal-fired power plants at the pithead are the least-cost sources of 24x7 power in India. Coal will therefore continue to play a critical role in raising the living standards of all Indians over the next three decades even as the generation capacity of other non-fossil fuel sources (solar, wind, hydro, and nuclear) increases to decarbonize the power sector. Therefore, it is important for the government to ensure that coal is mined, transported, and used in an environment friendly manner.

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The criticality of ensuring uninterrupted supply of coal of the right quality in the required amounts at the right time to generate electricity at affordable prices is becoming more evident today. Ultra-low coal stocks in power plants located away from the pithead have also created similar power shortages in the past. However, this is the first time that Indian Railways, which carries more than 60 per cent of nearly one billion tons of coal consumed in India, is forced to cancel more than 1000 train trips (in the congested east-north routes) during the summer vacations to transport coal to power plants despite the record level of 595 MT of coal supplied to power plants from the Coal India Limited and the Singerani Collieries Company Limited in FY 2021-22 in addition to the coal dispatched by captive mines to power plants. The national peak demand of 207 GW realized till date is substantially lower than the figure of 226 GW projected by the Central Electricity Authority for FY 2021-22, which could not be achieved due to the second wave of the Covid-19 pandemic.

The State and Central Governments must utilize this crisis as an opportunity to address some deep-rooted ills of the coal and power sectors instead of reverting to the status quo once the weather gods help us out of the current predicament. Specifically, Indian Railways must avert such mass cancellation of passenger trains in future by commissioning the entire stretch of the long-delayed Eastern Dedicated Freight Corridor on a war footing.

Debt-ridden DISCOMs

The state-owned DISCOMs distribute 95 per cent of the electricity in India and act as the cashier for the entire power sector. However, most of them are so poorly managed that their combined accumulated losses have crossed Rs 5.22 lakh crores at the end of FY 2019-20. The undisputed overdue amounts of the DISCOMs to the GENCOs have crossed Rs 1.06 lakh crores at the end of April 2022. The Independent Power Producers (IPPs) are severely affected since the undisputed overdue amounts from the DISCOMs to the IPPs have crossed Rs 59,000 crores. The IPPs are hence unable to import sufficient coal from ‘over-heated’ international markets due to the ongoing Russia-Ukraine conflict.

While UDAY was launched with the declared goal of ensuring the ‘permanent resolution of DISCOM issues,” most of the key targets for the operational and financial turnaround of the state-owned DISCOMs could not be achieved by FY 2019-20 even after 16 states took over 75 per cent of the DISCOMs’ debt (Rs 2.1 lakh crores) by issuing the UDAY bonds and transferring the proceeds to the DISCOMs. However, the managements of these state-owned DISCOMs enjoy absolute protection from any accountability due to the lack of will and capability in the State Electricity Regulators, who are normally retired bureaucrats, again without any accountability to the consumers.

The Ministry of Power has introduced another reform scheme (RPDS) for the state-owned DISCOMs with an outlay of more than Rs 3 lakh crores to reduce their Aggregate Technical and Commercial (AT & C) losses. This has been done despite acknowledging the fact that the high AT&C losses are largely due to managerial deficiencies and governance deficit in the state-owned DISCOMs. This situation can be corrected only if the State Electricity Regulatory Commissions convince the respective governments to introduce some form of Public-Private-Partnership in loss-making DISCOMs to improve their operational and financial performance as well as customer service.

Integrated policy for coal, power sectors

The Ministry of Coal (MoC) and the Coal India Limited (CIL) are responsible for unduly delaying the construction of non-coking coal washeries planned to be set up on a Build-Operate-Maintain basis in the coalfields of Chhattisgarh and Odisha, which supply 300 MT of high-ash thermal coal to power plants all over India. Consequently, 23–52 per cent of the coal samples drawn from coal supplied by the CIL from these States to power plants are below the declared grade.

Modern coal washeries can increase the energy content (Gross Calorific Value or GCV) of the coal dispatched by reducing the ash content of raw coal from as high as 40 per cent to 32-34 per cent with proven technology and best practices. Even a 10 per cent increase in the energy content of washed coal after washing the Run-of-Mine (ROM) coal in modern washeries will reduce the load on the already stretched Indian Railways system by enabling them to carry “more energy per wagon” to the power plants and thereby avoiding crisis like the current one.

However, the National Thermal Power Corporation and the Ministry of Power (MoP) have resisted the use of washed coal because the price of washed coal supplied from the CIL reduces the competitiveness of the TPPs (like the NTPC Dadri) located away from the pithead. Using washed coal with higher GCV than ROM coal can yield multiple benefits to a power plant by increasing its energy efficiency, lowering operations & maintenance costs, reducing pollution from ash ponds and stack emissions besides reducing transportation cost. However, this requires the MoC and the MoP to work with the NITI Aayog and external experts to develop an integrated coal policy to ensure the sustainable development of the country without compromising on energy security. Otherwise, we are condemned to repeat history.

(The writer is Professor and Head of the Energy, Environment, and Climate Change Program at National Institute of Advanced Studies, Bengaluru)