POWER SECTOR - BATTI GUL!
By Ruma Dubey
The dismal numbers of Coal India for Q2FY14 is worrisome. Not just because of the inefficient way in which world’s largest coal producer in terms of output is managed – a complete lackadaisical attitude. Typical of most Govt run organizations. It is more worrisome because it provides precious fuel to the India’s power sector and when Coal India’s performance shows a slack demand, surely there is cause to worry. It does not mean that people have cut down on usage of energy, it merely means that the power sector is seriously suffering from a malaise.
68% of India’s power is generated via thermal and these are fueled by coal, oil and gas. Coal accounts for 55% of India’s energy needs and 80% of all coal mined in India comes from the mines of Coal India and its subsidiaries. Thus it is very evident that if there is a shortage of coal, it is bound to directly affect power generation. The 12th Five Year Plan (2012-2017) has stated that coal production needs to go up to 795 million tones by 2016-17 while demand for Coal is expected to be around 1 billion tonne. So as such there is a deficit but Coal India has long time ago, put its hands up and said that it would simply not be possible to meet the target and in fact stated there will be a 20% coal shortage over next 5 years. Thus companies will have no option but to import expensive coal and that too when India has the reserves but it is just that Coal India suffers from lack of modernization and quick approvals for mining projects. This monopolistic situation of Coal is one of the reasons why India is today power deficient.
Talking about our power woes, a quick look at the current situation. The total power generation target for 2013-14 as per Central Electric Authority (CEA) is 15234 MW. This is essentially of thermal power units as it accounts for a giant size of the power pie. Power is generated by the Central Govt, the State Govt and the private sector. So the Center has been given a target of 3123.3 MW this fiscal and at end of 9MFY14, only 500MW was commissioned. Then the State Sector was given a target of 4451MW for FY14 and till end of 9MFY14, it generated only 1100 MW. The private sector comprised of 18 companies and their target is 7660 MW of which 2720MW was commissioned.
This means that of the total target of 15234MW for FY14, till end of 9MFY14, only 5001MW (including a 681 MW entry later from the state), was commissioned. Thus we are currently staring at a shortage of 67%. With just 6 more months to go, it is unlikely that we will end the fiscal without a deficit. Well, never meeting the given target is also a part of the tradition.
Of the total target, 50% contribution is from the private sector and of the 5001MW commissioned till date, private sector added 54% while the Center was the worst, adding a measly 10%.
Another very interesting though worrying fact has emerged. Power generation companies require boiler, turbine and generator (BTG) which is like the heart, ensuring efficient running of the power unit. Now till a few years ago, PSU BHEL was the sole supplier. Thankfully, that has changed but the sad part is that it not any Indian company which is sharing this space with BHEL but Chinese companies. Of the total power generation target of 15234MW, 9234MW will come from BHEL and the rest, 5975MW will come from Chinese equipments. The Center continues to give all its BTG order to BHEL, the state too all its BTG order to BHEL, except one which went to China and in the private sector, 6 BTG orders were given to BHEL, one to Siemens and 11 to China. Thus of the total 5001MW generated till end of 9MFY14, 67% of the BTG orders went to China. So while we are worried about using substandard Chinese products in our day-to-day life, our country will now be powered majorly by the Chinese equipments. Is that a comfortable feeling?
Actually nothing about the power sector, as of now is comforting. As stocks, power generation companies should be right at the top of buying list, along with Coal India. But policy paralysis and general sense of malaise has made them both very dubious to hold.
Yes, the power sector is a perfect reflection of the state of our country – we have everything but no political will, thanks to which foreigners are making merry, right from imported coal to BTGs.
PS: The CEA provides fantastic data unlike most other Govt agencies. For a detailed look at the power sector, please go to the following link:
http://www.cea.nic.in/reports/proj_mon/broad_status.pdf
Coal India and its subsidiaries produced 452.19 million tones during 2012-13 as against the production of 435.84 million tonnes in the year 2011-12 showing a growth of 3.7%.
Singareni Collieries Company Limited (SCCL) is the main source for supply of coal to the southern region. The company produced 53.19 million tonnes of coal during 2012-13 as against 52.21 million tonnes during the corresponding period last year. Small quantities of coal are also produced by TISCO, IISCO, DVC and others.