India grapples with coal shortages

June 28, 2012 at 2:59 PM
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NEW DELHI, June 28 (UPI) -- Amid India's ongoing domestic coal shortage, Tata Power, the country's largest private power producer, said it is eyeing coal mines abroad for fuel security.

"We are already scouting for coal mines overseas," said Tata Power Executive Director for Operations S Padmanabhan, Press Trust of India reports. He said the company was looking at Indonesia and South Africa for acquisitions.

"Given the demand for the fuel for our power plants and the shortage of domestically produced coal, we have to depend on imports," Padmanabhan said.

The company also aims to produce 50 million metric tons of coal annually by 2020 to ensure fuel security, he said.

For domestic supplies, the company relies on group company Tata Steel and Coal India, which is 90 percent owned by the government and provides 80 percent of the country's coal needs.

Coal India produces 440 million tons of coal, compared with a demand of about 650 million tons. It relies on imports to cover the gap.

Some analysts say India's coal shortage for the current fiscal year could be more than twice as large as it was two years ago.

In the fiscal year ending March 2012, Tata Power had imported 5.5 million tons of coal. For imports, Tata obtains coal from two Australian mines and four mines in Indonesia.

The utility company said it aims to increase its generation capacity to 26 gigawatts by 2020, from the current capacity of 5.2 gigawatts.

Tata didn't disclose investment details for the planned expansion but analysts estimate it would require an investment of about $17.52 billion, The Wall Street Journal reports.

While Tata Power says it has secured coal supplies for most of its expansion projects, several Indian utilities have had to curtail operations and reduce any previous plans for expansion as a result of the country's coal shortage.

Last month, the power deficit in the southern part of India rose as high as 4,350 megawatts, while the north had a deficit of 3,000 megawatts.

Because India's energy demand outpaces supply, power outages and blackouts are already frequent and nearly 400 million people, about one-third of India's total population, have no electricity at all.

"The investment climate has suffered significantly and this will hit growth in the power sector. State electricity boards do not have the ability to pay for power," Raaj Kumar, chief executive of Indian power trading company GMR Energy told the Times of India newspaper.

"Huge accumulated losses are leading to frequent load-shedding. The situation is gloomy," he said.

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