COAL CRISIS ? [GS II- SOCIAL JUSTICE]

21 Oct COAL CRISIS ? [GS II- SOCIAL JUSTICE]

CONTEXT: Currently it has been in news that Coal India dues from state gencos rise to Rs 22,000 cr

There is no denying the fact that the supply of coal in India is well below the demand.

•  Demand of coal in India→  nearly a billion million tonnes (MT)

•  Supply is → below 800 MT

Shortage of coal production-

• India’s coal reserves – around 300 billion MT

•  Annual requirement – around a billion MT per annum

When there is critical shortage of availability of coal at power plants, it is sometimes called a crisis. This can be on account of production.

Coal crises keep recurring in India, due to shortage in coal production.

COAL CRISIS : CASE I 

In 2014, some wrong calculations of a CAG, led to catastrophic consequences and coal production suffered, although the crisis was managed. 

IMMEDIATE REASONS FOR COAL CRISIS-

• An increase in the power demand on account of the post-pandemic economic recovery 

• unseasonal rainfall 

• an increase in international prices of coal

• a mismanagement of the supply chain within the country

REASONS FOR LOW COAL PRODUCTION-

• The stagnation in the production of coal by Coal India Limited (CIL) i.e. 600 MT for the past three years and not at the rate it was increasing (8-9%) during 2014-16. 

• The stagnant coal production from the non-CIL domain.

•  A number of mines were allocated to entities other than CIL.

 Why haven’t these mines increased coal production?-

 Non-CIL coal production fell from 128 MT in 2019-20 to 120 MT in 2020-21.

 The dependence increased on imported coal and when there was a rise in the international prices, a crisis occured. Moreover, the mining of coal from Indian reserves was already low. 

How can the coal production be increased? 

• There is a need to support, not monitor CIL

•  The Union Government has an important role to play in this regard

•  CIL should focus on mining

•  Government officers should coordinate with the States 

•  sarcastically, all the coal reserve States are ruled by non-National Democratic Alliance (NDA) parties

•  Not a single meeting with the States was held in Delhi during 2014-16 

•  The Union Government will also have to take up clearance-related issues with the Ministry of Environment, Forest and Climate Change.

• CIL, having reserves of around ₹35,000 crore in 2015, now strapped for funds, specially cash flows as GENCOs owe more than ₹20,000 crore to CIL.

• The Union Government offers should go down to the States, convey a value proposition and sit with State-level officers to resolve issues related to land acquisition and forest clearances.

ARRANGEMENT OF THE FUNDS-

 Funds will have to be arranged for the expansion of existing mines as well as the opening of new ones.

 First, the Union Government should stop squeezing out more funds from CIL , the way it did during the past few years, to balance its own Budget.

 This money should be used for opening new mines and expanding existing ones. 

Second, Government should consider providing cash to CIL against the dues owed by GENCOs. Non-CIL production will have to be augmented. There is a serious cash crunch.

Need to revive the inter-ministerial Coal Project Monitoring Group (CPMG), that was set up in 2015 and became dormant later, to fast-track clearances. 

The coal crisis may be temporarily over, but if the fundamentals of the crisis are not taken care of, it is likely to recur.

 What also needs to be looked at is the financial crisis that is brewing in the power sector of distribution companies.

plutus ias daily current affairs 21 Oct 2021

Rajeev Yadav

Plutus IAS Current Affairs Team Member