cost renewable substitutes. According to PRS Legislative Research, an Indian non-profit organisation which conducts independent research, the total contribution of coal in power generation reduced Figure 1. Primary energy consumption of commercial fuels in 2018 (global average and in India). from an average of 72.5% to 65.6% between March and April 2020, amidst the rise in number of COVID-19 cases. There are a lot of factors responsible for this, including lower running cost of renewable power plants compared to coal-based thermal power plants. According to Power System Operation Corp. Ltd (POSOCO), a government owned enterprise under the Indian Ministry of Power, the plant load factor (PLF) of thermal power plants has declined considerably in the past decade, reducing from 77.5% in 2009 – 2010 to 56.4% in 2019 – 2020.1 A lower PLF suggests that coal-based plants in the Figure 2. India’s thermal coal production and consumption. country have been lying idle for long durations. The declining utilisation of the total capacity, in addition to weakening demand, is expected to undermine the financial sustainability of thermal power plants even more in the coming years.
Coal production
Figure 3. Power consumption by consumer segment in 2018 – 2019. Sources: Central Electricity Authority; PRS.
Figure 4. India’s thermal imports by source. Source: IHS India coal data tables, June 2019.
10
WORLD COAL ISSUE 2 2021
The Indian government is focusing on pushing self-reliance strategy in different industrial sectors following the COVID-19 pandemic, which also includes capacity expansion of Indian coal production. This is reflected by the government’s coal mining liberalisation initiative for the deregulation of the domestic coal market, which would significantly increase coal production in order to meet the expected demand growth. In June 2020, the Prime Minister of India, Narendra Modi, conducted the auction of various mining blocks for commercial purposes. This decision was part of the recent government campaign, Atmanirbhar Bharat Abhiyan, and was proposed through the Mineral Laws (Amendment) Ordinance, 2020. These 41 coal mines are located in different regions of the country including: Chhattisgarh (9), Odisha (9), Madhya Pradesh (11), Jharkhand (9), and Maharashtra (3). The resources also include two metallurgical coal reserves and two coal mines with both metallurgical and non-metallurgical reserves. According to the Coal Ministry of India, the 41 coal mines, which are now open for auction, can hit a peak production of 225 million t by 2025 – 2026, which can potentially save subsequent foreign exchange for thermal coal imports. Despite having such high availability of coal reserves, coal is still among the top five commodities
