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Private Mining: Private capacity mining augmentation within the specified timeframe is
behind schedule, and with an unrealistic compound annual growth rate of almost 60% for this
sector (to contribute 500 MT out of 1500 MT). A depressed commodity market and
favourable macro situation (with low coal prices) means pressure on imports will remain.
However, with lower output from the private sector, even a lower total domestic demand
would still leave a residual demand on the shoulders of Coal India Limited, which would
have to grow significantly.
Increasing scrutiny on environmental impact: The Indian government has put out stringent
environmental conditions for upcoming thermal plants. Going forward, it is expected that
there would be increased oversight and more stringent standards for pollution monitoring,
imposing costs on generation companies and also impacting coal quality requirements. This
can perhaps increase use of washed coal or there could be an import substitution of domestic
coal. Ministry of Environment, Forest and Climate Change would probably move for the
older public sector state/central to either shape-up or shut down. This would allow weak
plants to either be improved or be removed from the pipeline, which will help in improving
PLF (Plant Load Factors) and capacities coming online and demand growth balance could be
maintained.
5-year investment already locked in the sector: For the near future the demand sectors have
already been locked into consumption trends that are determined by technology of the
upcoming capacity and appropriate coal quality. Any changes in these parameters are not easy
hence, impervious to any policy changes at this stage however, future plants ~10 years would
be more amenable to change considering no sunk costs and greater flexibility in
commissioning new capacity. Also, reduction in future PLFs is a scenario, whereas newer
plants could displace older plants as they are more efficient and less polluting. Choice of
supercritical power plants in the future can also impact not just efficiency and tons
requirement but also type of coal (coal grade, coal quality/variance, etc.), all of which point
to either imports or washed coal.
In the backdrop of increasing coal demand and reliance on coal for power generation,
collective effort of the government, power producers, coal miners and service providers are
necessary to ensure modern and sufficient infrastructure.