Mega power plants may have to import coal

In a change in the ultra mega power plant (UMPP) policy, the government is likely to notify that power projects of 4000 MW and above would not get assured coal supply from domestic sources and should be encouraged to get into long term import contracts.

The feeling with government is that domestic resources should be saved for the small and medium power projects, which may not be economically viable in case these have to import coal. On the other hand, large projects can be viably launched even if they have to import 100% of their coal requirements. The government will also encourage UMMPs to be located close to the coastal regions so as to cut the cost of coal transport in case of import. In such an arrangement, the government believes domestic coal supply can be enhanced for smaller projects, which will help cut the coal crunch in the power sector.

The government has till now awarded four UMPPs to private operators. While two of these have been given assured supply of coal, the other two may have to depend on import of coal. All new UMMPs, if the policy change is notified, will be based on imported coal.

India faces up to 11-12% peak time shortfall in power supply and is looking to boost power generation in the country. However, since nuclear power capacity is expected to expand only slowly, it will have to depend more on thermal plants, which has necessitated rationalising the coal use. Though India has one of the world’s largest coal reserves, mining capacity has been historically low due to public control over the industry.