India’s coal sector clearly needs some urgent initiatives from the government in order to give it a boost.
Some analysts say it’s time the government opened up commercial coal mining to the private sector. This would have a dual effect — it would attract global coal mining companies and also bring new technology and best practices into the country.
Despite government promises to the contrary, there’s been heavy reliance on imported coal.
Last February, the government decided to open the sector to private participation, touted as a historic move. The Cabinet Committee on Economic Affairs also approved the methodology for the auction of coal mines and coal blocks.
But there’s no been much forward movement from then.
A report by B2B e-commerce company mjunction showed imports in India going up 6.7% to 171.81 million tons (MT) in the April-December period of the present financial year.
The December figures, however, show a dip of 8.09%, to 17.25 MT from 18.77 MT in December 2017. This could be because of two reasons: demand has waned somewhat and/or the local, public-sector coal producers dispatched more to end-users in December.
Of the total imports in December last year, non-coking coal was at 12.52 MT as compared to 13.01 MT imported in November 2018.
No one is sure whether the December figures were an aberration or a new trend, though some say the demand for imported coal will come down even more in the coming months.
The International Energy Agency (EIA), on the other hand, has said an inadequate rise in coal production riding on the back of higher demand would continue to push imports till 2023.
Coal is responsible for almost 70% the power generated in India. Despite claims by the Narendra Modi government of boosting local production in order to stop reliance on imported coal by 2016, things are otherwise on the ground.
In 2017-18, India imported 208 MT of coal, higher than the 191 MT in 2016-17. The coal import bill also went up to U.S. $22,901.23 million (approximately Rs 1.63 lakh crore) in 2017-18 from U.S. $15,759.93 million (Rs 1.1 lakh crore) the previous year; most are betting imports will hit a new year by the end of the current financial year.
To a layman, it would come as a surprise that in the face of such short supply, India is the world’s fourth-largest coal producer.
The uneven supply and demand is largely because of faulty mining policy and the cancelation of coal block allocations in 2014. That, industry watchers believe, should be allowed in order to revive the sector.