Govt looks at coal imports as power plants stare at looming shortage

The government is preparing a backup plan to feed imported coal to power plants in case the Supreme Court decided to cancel all captive coal mines allocated since 1993.

Since a blanket cancellation of coal blocks allocated for captive use will badly hit power producers, further worsening the present scenario, the power ministry is reported to have sought cabinet nod for supply of imported coal to power plants as well.

The ministry has proposed that Coal India supply all power plants commissioned after 2009 by importing the fuel and pooling prices with domestic coal.

"Coal India will offer interim coal supply to power plants that are at an advanced stage of commissioning but whose attached coal blocks are either delayed or in the process of de-allocation for reasons beyond their control. If the blocks are finally de-allocated, the interim supply will be converted into long-term fuel supply contracts," a coal ministry official said.

Moreover, the coal ministry has pointed out that captive coal mines have missed their 2013-14 target by producing just 39 million tonnes against a target of 50 million tonnes.

The coal ministry had earlier projected output from captive coal blocks could reach 53 million tonnes in the ongoing fiscal.

The Supreme Court has held that the allocation of all 218 coal blocks made since 1993 are illegal and arbitrarily, casting doubt on the operation of even the 40 producing blocks and 6 others that are likely to become operational in the current fiscal (See: Goyal welcomes SC ruling declaring all coal allocations illegal).

The government has told the Supreme Court that it "wants re-auction of all 218 coal blocks" declared illegal but sought exemption to the 40 that are now producing and ready for use by power plants.

The coal ministry, however, is unable to give reasons for lower production and attributes the fall in output to factors like "pending court cases in matters relating to the captive coal blocks."

"Based on the review of the status of producing coal blocks which have not yet attained PRC (peak rated capacity) and the coal blocks which were likely to commence production in 2014-15 as well as the information/assurance given by the coal block allottees for achieving production during 2014-15," is 52.925 MT, the ministry had earlier said.

The central government had identified a total of 328 coal blocks for allocation for captive use and has so far allocated 218 and deallocated 80 coal blocks.

But, as the Supreme Court, which is looking into the issue of corruption in the allocation of coal blocks, had said, "There was no fair and transparent procedure, all resulting in unfair distribution of the national wealth."

The apex court is scheduled to hear the case on 9 September.