Coal news and updates

December drill for coal auction

A government note being prepared for the cabinet has suggested that the coal-e-auction process should start as early as December. Besides, the note for the cabinet committee on economic affairs (CCEA) has proposed that Coal India should supply fuel to the power project developers who are unable to win back their mines in the auction.

Top officials said they hoped to get the approval for this proposal along with the pooling of coal and gas prices for stranded power plants around next week. This will also help to set up the pooling mechanism by December.

“The auctions can start towards December-end and end in January,” they said.

It is estimated that coal from the 214 blocks de-allocated by the Supreme Court in September could be used to generate 38,850MW electricity.

Officials said the stranded power projects needed to win back their mines through the auction if they wanted to take off within the time frame set by them.

“However, we have to be prepared for the situation that some of them will not win back their mines and create a road map for giving coal supply links to them. Hence, we will be asking Coal India Ltd (CIL) to supply these units as well as to projects of 14,500MW in the pipeline that have no fuel supply agreements,” said officials.

CIL has signed fuel supply agreements for projects with around 74,000MW capacity. However, the PSU is unlikely to ramp up its production significantly next year, it will have to import the coal and pool its price with the domestic price.

Gas price pooling

A proposal to pool the price of imported and domestic gas will also be placed before the CCEA.

As much as 3,761MW of power generation have been affected because of the non-availability of domestic gas. Supplies have not been committed for another 5,349MW.

A note prepared by the coal ministry on the issue has estimated that the cost of power generated by the units using pooled gas will be Rs 5.50-6 a unit.

To bring down the price, the government will need to provide subsidy on the cost of gas from the National Clean Energy Fund, which was set up in 2010 to “ameliorate the negative environmental consequence and increased pollution levels” by levying a cess on coal mining.

The Centre has collected about Rs 40,000 crore from this fund, but actual allocations from it have been very low.

Officials see an annual outflow of Rs 2,500-3,000 crore if subsidy is given to the gas-based power plants.

The note also seeks to waive VAT on imported gas and reduce the pipeline tariff levied by GAIL (India) Ltd.

Gas-based power plants have a capacity of 18,964MW, running at 70-75 per cent capacity, and accounts for 8.3 per cent of the electricity generated in the country.

Exploration policy

Oil minister Dharmendra Pradhan said the government planned to overhaul the exploration policy to attract investors, spur energy output and revive the economy, according to PTI.

“We want to increase ease of doing business in India. Bottlenecks have to be removed, red-tape cut and investors given confidence so that they can come and invest in oil and gas exploration and production,” Pradhan said.

Pradhan’s ministry has also set stiff targets for state explorers such as ONGC to reverse the declining trend in oil and gas output and cut dependence on imports.

Source: PTI