Coal Supply to TPPs-Issues and Challenges

-ISSUES AND CHALLENGES

1

Gopal Prasad, Regional DirectorCMPDI, Asansol

1200 million people - Second-largest population

after China

Impressive annual GDP growth averaging 7.6%

from 2000 to 2007 and around 8 % since then

INDIA-SOCIO-ECONOMIC SCENARIO

from 2000 to 2007 and around 8 % since then

Among top five countries of the world in terms of

absolute GDP, based on purchasing power parity

(PPP)

2

BUT..

On per-capita income basis - well behind other

fast-growing nations

Human development index Very poor

Poverty still remains a major challenge.

INDIA-SOCIO-ECONOMIC SCENARIO(Contd.)

Poverty still remains a major challenge.

Per capita electricity consumption (779 KW) far

below the world average (2500 KW)

Nearly 60 crore Indians do not have access to

electricity

3

Must maintain Economic growth of 8 % to

10 % over the next 25 years to eradicate

poverty and meet human development goals

And to achieve sustained growth Growth

of Power Sector is paramount because:

WHAT NEEDS TO BE DONE

of Power Sector is paramount because:

Electricity a basic human need and

economic indicator

Electricity - Critical infrastructure on which

the socio-economic development of the

country depends

4

Access to Electricity To be made available

for all households

Availability of Power - Demand to be fully

met by 2012

NATIONAL ELECTRICITY POLICY OBJECTIVES

met by 2012

Per Capita Electricity Ensuring Per capita

availability of electricity over 1000 units by

2012.

5

One of the largest and most important industries in

India fulfilling the energy requirements of various

other industries.

One of the most critical components of infrastructure

affecting economic growth and the well-being of our

nation.

INDIAN POWER SECTOR

nation.

Significant progress after Independence 1362 MW

in 1947 to 190592 MW (Feb, 12) 140 fold increase in

65 years

Per capita consumption of electricity from 15 kWh in

1950 to about 779 kWh in 2009-10 about 52 times.

6

Thermal Power65.4 % of total installed capacityMain raw material used is coal around 84.5 % of thermal

power generated using coal and rest (14.5 %) by using Gas and Oil

Hydro Power20.4 % of total installed capacity Hydro power generation potential worth 1,50,000 MW Only

25 % harnessed till date

share of generating capacity declined from 34 per cent at the

end of the Sixth Plan to 20.5 per cent at the end of the eleventh

PRIMARY SOURCES OF POWER

end of the Sixth Plan to 20.5 per cent at the end of the eleventh

Plan.

Nuclear Power2.5 % of total installed capacity Heat sourced from nuclear reactors is used

Renewable Energy Sources11.7 % Renewable sources like sun, wind, biomass

Great potential to contribute to our energy security and

reducing green-house gas emissions

Among top 5 largest wind power generators in the world. 7

PRESENT INSTALLED CAPACITY

All

India

Thermal Power Nuclear Hydro RES Total

Coal Gas Oil Total

MW 105437.4 18093.9 1199.8 124731 4780 38848.4 22233.2 190592.6

% 55.3 9.5 0.6 65.4 2.5 20.4 11.7 100

POWER GENERATIONPOWER GENERATION

798949.5 Million Units up to Feb-12 against

the target of 855000 Million Units for 2011-12

Energy deficit of 11.1 % and peak demand

deficit of 12.1 % during February-2012.

8

Year Projected

population

(million)

Projected demand of Electricity Target for

2011-12Total

Electricity

(Billion KWh)

Peak

Demand

(GW)

Capacity

(GW)

2011-12 1200 1167 168 233 Capacity192

PROJECTION OF COUNTRYS ELECTRICITY

DEMAND - IEP REPORT

2011-12 1200 1167 168 233 Capacity192

Giga Watts

Generation

880 Bl. Units

2016-17 1275 1687 250 337

2021-22 1347 2438 372 488

2026-27 1411 3423 522 685

2031-32 1468 4806 733 960

Power generation to grow at an average rate of not

less than 6 % in years to come

9

COAL TO REMAIN AS MAINSTAY

Indian power sector heavily dependent on coal for

meeting its power generation targets

Consumes about 66 % of the coal Consumption (Year-

2010)

Power Steel Cement Others Total

Million 372 41 26 127 566Million

Tonnes

372 41 26 127 566

% 65.8 7.2 4.6 22.4 100

Above trend to continue in future It is estimated

that Coal would account for 56 % of installed capacity

in 2030

10

POWER COAL DEMAND-SUPPLY GAP

Most of the recent incremental generation

capacity additions - coal based

Future Scenario - to remain unchanged

IX Plan

(Actual)

X Plan

(Actual)

XI Plan

(Likely)

XII Plan

(Potential)

Incremental capacity

addition (MW)

19119 20950 52000 80000

Coal Based (MW) 7930 8575 35000 62700

11

Period Coal

consumption

Total Coal receipt by TPPs

including import (MT)

Import of coal

by Power

Trend over the years - gap between demand of coal

and its indigenous availability is increasing resulting

into increased volume of coal import

POWER COAL DEMAND-SUPPLY GAPContd.

consumption

By TPPs (MT)

including import (MT) by Power

Sector (MT)

2006-07 300.561 301.417 7.780

2007-08 322.437 321.433 8.067

2008-09 346.543 349.754 14.190

2009-10 360.845 367.652 23.230

2010-11 377.875 380.336 30.302

2011-12 (up to

Dec-12)

292.652 292.370 33.251

12

Projected Demand Supply Gap : As high as 943

POWER COAL DEMAND-SUPPLY GAPContd.

Gap between demand and supply of thermalcoal is showing increasing trend.

Besides Power, Coal is also required by theother industrial sectors of the Country.

Projected Demand Supply Gap : As high as 943

MT in 2031-32

XI Plan (2011-12)

(Target in MT)

XII Plan (2016-17)

(Projection in MT)

XIII Plan (2021-22)

(Projection in MT)

IEP (2031-32)

(Projection in MT)

Demand of Coal 696.3 980.50 1373.00 2343.00

Domestic

production

554.00 795.00 950.00 1400.00

Gap 142.03 185.50 423.00 943.00

13

SECURED COAL SUPPLY FOR POWER

SECTOR WAY FORWARD

To achieve the objective of secured supply of coal,

effective management of both-the supply side and

demand side of Coal - is of paramount importance.

Supply side comprises coal resources

augmentation, production and procurement of coal

and movement of coal from the source to the Power

Plants.

Demand side of coal is represented by conversion,

distribution and utilization of electricity.

14

MANAGING THE SUPPLY SIDE

Augmentation of Coal resources

Type of Coal Proved (MT) Indicated (MT) Inferred (MT) Total (MT)

Coking Coal 17669.03 13703.32 2101.91 33474.26

Non-Coking Coal 95738.76 12368.44 31488.11 250895.31

Tertiary Coal 593.81 99.34 799.49 1492.64

Grand Total 114001.60 137471.10 34389.51 285862.21

(GSI Figures)

Geological hard coal resources of 286 BT, but only 40 % proven

Geological hard coal resources of 286 BT, but only 40 % proven

Experts estimate that only 21% of the inplace resources can be

recovered (inplace resource to mineable reserve ratio of 4.7:1)

Recoverable coal reserves, thus, about 58.6 BT.

Thus, urgent need to bring inferred and indicated resources under

proven category by increased rate of detailed exploration

Prop up the rate of promotional drilling for augmenting the overall

resource base

Introduce modern techniques for achieving higher exploration rate.

15

INITIATIVES TAKEN

CIL in association with GSI, MECL and private drillers

has upped drilling performance

Aim - to increase resources in proved category and

add new resources through promotional drilling.

Drilling targets increased from 520000m in FY-10 to

610000m in FY-12.610000m in FY-12.

Going for adoption of modern exploration

technologies for rapid delineation of resources.

Efforts are being made towards classification of

resources as per UNFCC code.

16

MANAGING THE SUPPLY SIDE (Contd.)

Enhancement of Indigenous Coal production

Envisaged targets

Sources CIL

(MT)

SCCL

(MT)

Captive Block owners

and others (MT)

Total

(MT)

2011-12 447 51 56 554

2016-17 615 57 123 7952016-17 615 57 123 795

2021-22 650 63 237 950

IEP (2031-32) 1400

Indigenous coal production from primarily three

sources CIL, SCCL and Captive Block Miners and

others.

Limited scope of augmenting coal output from SCCL

Onus on CIL and captive Mining.17


CHALLENGES BEFORE CIL

Growth from 70 MT in early 1970s to in excess of

400 MT at present

Stagnating in recent years

Year FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11Year FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 FY-11

MT 324 343 361 379 404 431 431

Reasons

Problems of Land acquisition

Delays in obtaining Environmental Clearances

Law and Order problems

Low Productivity18

Problems of Land acquisition

Biggest bottleneck for CIL in achieving targets

Projects delayed due to non-acquisition of land

Against the target of 62000 Ha of land during XI Plan,

acquisition of only 6000 Ha

In-ordinate delays in acquisition of forest land In-ordinate delays in acquisition of forest land

multiple State and Central Government agencies

Delays in acquisition of Tenancy land

non-availability of ownership records

non-cooperation from local administration

absence of uniform R&R policy

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Delays in obtaining Environmental Clearances

Normative time for obtaining EC is 2-3 years,

but on average it takes 5-6 years

In the FY-11, 154 projects (210 MT total

capacity) of CIL were waiting for environmentalcapacity) of CIL were waiting for environmental

clearance.

Augmentation of production from existing

projects also requires fresh EC delay in

expansion Projects

20

A good chunk of CILs mining areas fall in Naxal-

affected belts

Frequent Bandhs affecting coal output adversely

Land acquisition in these areas is doubly difficult.

Law and Order problems

Low Productivity

Production from the UG mines showing downward

trend over the years

UG mines are operating with very low productivity.

Mass production technology adopted in very few

mines.

Many small Open cast mines also operating with

very low capacity HEMMs and low efficiencies

21

91 projects (ultimate capacity 207 MT) identified in X

Plan of which 86 approved and underway Expected to

contribute 100 MT in FY-12

76 projects (ultimate capacity 178.78 MT) identified in XI

Plan approved and underway

Adopting latest technologies in its mines going for high

capacity equipment in Open Cast mines.

INITIATIVES TAKEN BY CIL

capacity equipment in Open Cast mines.

Introduced high wall miner to win the coal blocked beyond

the ultimate pit boundary.

Introduced independent truck dispatch system in OCPs

Introduced continuous miners in several UG mines

aiming to introduce mass production technology for UG

operations.

Invited bids for private participation in winning coal in

abandoned mines. 22

Efforts to identify sources of coal in the foreign countries acquired two

virgin blocks in Mozambique

Invited EOI from global operators for selection of strategic partners for

overseas operations

Efforts for long term contracts with foreign sources of coal with an aim

to ensure secured supply of coal on sustainable basis

Envisaging buying stakes in foreign coal companies for obtaining coal

supplies.

INITIATIVES TAKEN (Contd.)

Strengthening coal evacuation infrastructures MOU with RITES for

upgrading existing Sidings and also for launching new rail line projects

Proposal to Railways for allowing self owned railway wagons

Proposal to build three new rail links totaling 350 km to connect interior

coal fields

JV with Shipping Corporation for handling import of coal and with Indian

Railways to transport imported coal to customers doorstep.

Constant touch with various Ministries and State/local administration for

statutory clearances in time and to obtain the assistance of local/state

administration, wherever needed.23

Coal sector has been one of the most regulated sectors of Indian

Economy till 1993

Subsequently, captive coal mining has been allowed in several sectors

including Power generation aim was to augment domestic coal

production.

Captive mining did not perform, as envisaged

Out of 208 allotted blocks, mining could be started in only 26 blocks till

date

Likely contribution around 50 MT against targeted 100 MT (FY-12)

CAPTIVE MINING CHALLENGES

Likely contribution around 50 MT against targeted 100 MT (FY-12)

Reasons for poor performance

Lack of serious efforts by several block allottees towards

development of allotted blocks leading to de-allocation of blocks

Land acquisition problems

Employment claim of land losers irrespective of quantum of land

Resistance of PAPs against shifting to rehabilitation sites

Scarcity of land for rehabilitation sites,

Demand of exorbitantly high rate of land compensation

Failure/ delays in obtaining Environmental and forestry clearances

Delay in issuance of mining leases by State Governments

24

Captive mining will have to come of age in future

Output from these blocks needs to be enhanced from a

level of around 50 MT in FY-12 to 123 MT in FY-17 and 237

MT in FY-22.

Some of the required reforms/steps for augmenting the

coal output from captive blocks may be:

Allocation to serious players newly introduced system of

CAPTIVE MINING WAY FORWARD

Allocation to serious players newly introduced system of

competitive bidding likely to eliminate non-serious entities

To create market mechanism for surplus coal produced

Adopting single window system for statutory clearances

Formulating an effective and uniform Land Acquisition

and R & R Policy

Provision of cost effective coal evacuation infrastructure

Support from State Govt. agencies25


Import of CoalGap between demand of Coal and indigenous availability of power coal is

showing increasing trend.

Besides Power Sector, Coal is also required by the other industrial

sectors of the Country.

In view of the projected demand of coal and anticipated indigenous

availability, the demand-supply gap is likely to get wider:

XI Plan (2011-12) XII Plan (2016-17) XI Plan (2021-22) IEP (2031-32)XI Plan (2011-12)

(Target in MT)

XII Plan (2016-17)

(Projection in MT)

XI Plan (2021-22)

(Projection in MT)

IEP (2031-32)

(Projection in MT)

Demand of Coal 696.3 980.50 1373.00 2343.00

Indigenous

availability

554.00 795.00 950.00 1400.00

Gap 142.03 185.50 423.00 943.00

Up till now, the demand-supply gaps were not very wide and therefore

have been managed by import of coal at a relatively smaller scale.

However, to meet the burgeoning coal demand, there is no other way but

to go for the import of coal in a comprehensive and planned manner.

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Import of CoalIssues involved

International coal market is facing severe competition owing to

spurt in coal demand from all corners.

Rising demand of coal in the international market to lead to

increased price volatility.

Present capacity of Indian ports not enough to handle the

imported quantity

Total coal handling capacity of 81 MT against coal traffic of 92

MT (FY 09) idling of vessels

Entry of cape size vessels restricted owing to lower draft of

Indian ports requiring more number of trips of small size vessels

Proposed capacity addition of ports will not be sufficient to

handle the projected volume of coal import.

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INITIATIVES TAKEN AND WAY FORWARD

To ensure sustainable import of coal at reasonable price, assured

coal supply sources need to be located either by entering into long

term agreement with foreign suppliers or by owning mines in a foreign

country or by combination of both.

Indonesia, South Africa and Mozambiqe would be ideal countries to

approach for the sustainable import.

Urgent need to ensure coal supply through import through bilateral

Government level understanding between the two countries.Government level understanding between the two countries.

Indian ports will have to be upgraded to meet the increased volume

of coal import.

Time has come to develop a modern and exclusive deep sea Coal

terminals accompanied with dedicated/captive cargo.

Besides augmenting the cargo handling capacity of ports, it is also

essential to enhance the evacuation capacity for the outward

movement of imported coal from the port to its destination.

Government has taken a welcome decision in the Budget-2012-13 to

exempt the import of coal from custom duty.

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Strengthening logistic infrastructure

Ironical that at on one hand Power Plants are facing shortage of coal

and on the other hand CIL has a pit head stock of around 50 MT (as on

1.1.12) lying unutilized.

Mismatch clearly indicates that the countrys coal evacuation

infrastructure is not capable enough to handle its entire coal

production. The evacuation infrastructure has failed to keep pace withproduction. The evacuation infrastructure has failed to keep pace with

coal production constant increase in the pit head stock from 27.20

MT on 01.01.07 to 49.16 Mt on 01.01.12.

Indigenous Coal production to rise constantly and may reach the

level of 1400 MT by 2030.

Also, about 900 MT coal likely to be imported (2030) to meet the

Countrys projected energy demand.

Thus, role of coal evacuation infrastructure is of paramount

importance.29

WAY FORWARD

Major chunk of coal movement by Rail (49 %) [ Road (27 %) and MGR (19

%)]

Scope of augmenting evacuation capacity through roads is limited.

MGR is an area specific mode of transport cater to a limited area

Hence, burden of coal transportation to be borne primarily by the

Railways Coal traffic by rail mode to surpass 900 Million tonnes by 2030.

Need of dedicated rail lines special NS & EW corridors may have to be

considered by railways.

Introduction of lighter wagons Will reduce the high net to tare load Introduction of lighter wagons Will reduce the high net to tare load

ratio.

A good option is to use Inland Water Transport for Thermal Power Plants

located near the river basins eg Farakka & Kahalgaon Super TPS

Emphasis on coal beneficiation will result in enhanced thermal

efficiency of power plants and also reduction in hauling need by 6-10 %.

Need to upgrade sidings and associated loading equipments,

Loading & unloading infrastructure needs to be fully mechanized

Aerial ropeway, Conveyor belt and Merry-Go-Round rail systems etc.

need to be created and re-vamped wherever necessary30

MANAGING DEMAND SIDE OF COAL A VIABLE

OPTION OF REDUCING DEMAND-SUPPLY GAP

The Demand side of Coal can be monitored and managed

by focusing primarily on three key areas namely:

Improvement in conversion efficiency of TPPs

Average conversion efficiency - 30 %, lower than world average of 36 %.Average conversion efficiency - 30 %, lower than world average of 36 %.

Results in increased specific coal consumption - more CO2 emissions

Steps needed to improve the efficiency of thermal power plants, which

in turn would ensure reduced coal demand:

Maintenance of existing TPPs

Adopting high standards of plant maintenance, to maintain efficiency for

longer periods.31

Design of new Power PlantsAdoption of supercritical (SC) and ultra-supercritical (USC) steam conditions for

new generating plants, in conjunction with modern steam turbine designs key to

improved plant efficiency Coal consumption is almost half in comparison to

conventional sub-critical power plants.

Drying of coal to reduce moisture content

MANAGING DEMAND SIDE OF COAL A VIABLE

OPTION OF REDUCING DEMAND-SUPPLY GAP

contd.

Drying of coal to reduce moisture content High moisture content of coal reduces the efficiency of Coal-fired plants up to five

percentage points

Adoption of efficient coal-drying technology using either waste heat or low-grade

steam

Reduction of Ash percentage Causes loss of heat Results in reduced conversion efficiency

High ash content coal should be beneficiated prior to feeding to the power plants.

32

Checking the Transmission and distribution losses

Transmission and distribution losses are still

hovering around 30 % a staggering loss.

On the other hand such losses are as low as 4 % in

Japan, South KoreaJapan, South Korea

Even many developing countries have managed to

peg this loss under 15 %

Urgent need to curb such losses, which in turn

would result in reduced coal demand.

33

Judicious use of electricity, use of energy

efficient home appliances, conservation of power

etc. Electricity saved is equivalent to electricity

generated.

FEW MORE STEPS FOR REDUCING THE DEMAND OF COAL

More emphasis on other sources Non-

conventional sources, Nuclear power, Hydel power,

gas based power etc.

Developing alternative sources of energy such as

CBM, CMM, Shale gas, Coal to liquid etc.

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Conclusion

India has the secondlargest population after China, with an estimated 1200 million people. Although Indias annual GDP

growth has been impressive in recent years, but human development index has not improved. Poverty still remains a

major challenge. If India has to eradicate poverty and meet its human development goals, it needs to sustain an

economic growth of 8 % to 10 % over the next 25 years for which proportionate growth in power sector is a must. Power

sector has a very important role to play in achieving the desired growth rate in a sustainable manner. To meet the power

requirements, the sector will have to add at least 20-30 GW of generation capacity on yearly basis.

Indian power sector is heavily dependent on coal for meeting its power generation targets. About 66 % of the coal in the

country is presently consumed in the power sector (Year-2010). At present about 55 % of total electricity production in

India is from Coal Based Thermal Power. It is estimated that Coal would account for about 56 % of power generated in

India even in 2030. Thus coal is going to remain mainstay for achieving the Power generation targets for many years to

come.

At present, India is unable to meet its thermal coal requirements from indigenous sources. The gap between the demand

of thermal coal and indigenous supply is gradually getting wider. During the current financial year 2011-12, the

anticipated gap between the requirement and availability of domestic coal has been estimated around 54 MT, which isanticipated gap between the requirement and availability of domestic coal has been estimated around 54 MT, which is

being made up by import of coal. In view of the projected demand of coal and projected availability of indigenous coal,

the demand-supply gap is bound to get wider in the coming years.

It, therefore, becomes extremely important for the growth of countrys power sector to not only ensure development and

availability of domestic coal resources but also look for import of coal in a sustained manner to fill up the demand-supply

gap.

However, there are various issues and challenges, which need to be tackled for a secured supply of coal to the country

in general and power sector in particular. There is immediate need for initiating multipronged corrective actions to

overcome the various issues and challenges, which are coming in the way secured supply of coal to the industries.

Some of the suggested actions are augmentation of indigenous coal resources, ease and clarity in land acquisition

process, effective and time bound Environmental & Forestry clearance process, emphasis on increased productivity in

mines, adoption of modern technology-both in mining as well as power generation, stress on coal beneficiation, effective

action towards securing import of coal from reliable foreign sources in a sustained and cost effective manner,

modernization of coal evacuation infrastructure, laying emphasis on increased generation efficiency, checking T & D

losses etc.

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Documents

Coal Supply to TPPs-Issues and Challenges