Coal Sector - a overview

India is bestowed with abundant coal reserves, estimated at an enormous 267 billion tonnes (of which the proven coal reserves are placed at 106 billion tonnes). The proven coal resources of India account for nearly 7.1% of the world’s proven coal reserves. 

The irony is that the country’s most vital primary source of energy is actually quite abundant but between extracting the coal and getting it to the power stations lies a range of hurdles, including environmental and law and order issues and lack of investment.

Growth in the coal sector has historically not been commensurate with the country’s requirements. Peak power shortages have been as high as 14% and, energy shortages, 11-12%. Coal India Ltd has delivered growth of 5% or less, which is half the desired economic growth rate. The coal sector is constrained by supply limitations, inadequate drilling capacity, absence of a progressive regulatory framework, minimal private participation, high turnaround time and long gestation periods in getting clearances for mining projects. There is a need to attract investments in making available dedicated cargo vessels and modern and exclusive deep-sea coal terminals. In addition, the sector has to embark on a phase of climate change related research and development and incorporate clean technologies.

To remove the opaqueness and irregularities surrounding the award of so-called captive coal blocks, the government introduced the Minerals (Development and Regulation) Amendment Bill for allotting captive blocks to iron, steel, power and cement firms that use the coal for their own plants. Introduced in the Rajya Sabha in 2008, it is yet to be passed.

we should immediately start acquiring coal assets abroad just as China has done, and build coastal thermal plants based on imported coal. Ports and rail links are to be developed for transporting imported coal

The long-term growth of the coal sector requires a confident and renewed mindset in developing coal resources through decontrol of the coal sector, listing of Coal India on the capital markets, establishment of an independent regulator and a level playing competitive environment, which supplements the framework of the holistic energy and infrastructure sector in India.