The loss of production from captive coal mines allocated to companies has surely cost India dear. Delayed clearances for coal blocks, as well as companies’ own failure in developing mines, appear to have had a financial implication of Rs 1.46 lakh crore for the country.
The figure has been arrived at by adding the actual loss the country has incurred in partly making up for the production shortfall — by importing more expensive coal from other countries — and the opportunity loss due to non-generation of electricity because of coal crunch over the past five years.
According to consultancy firm KPMG, the total loss of output from captive coal mines over this period has been 394 million tonnes (mt) — based on delays with reference to a normative time of 54 months for developing allocated mines. Of this, 200 mt shortfall has been substituted with imported coal. Assuming the delivered cost of imported coal at Rs 3,980 a tonne and that of domestic coal for a port-based plant at Rs 2,380 a tonne, the additional cost on imported coal works out to Rs 1,600 a tonne — Rs 32,000 crore for 200 mt imported coal. (COST OF COAL INEFFICIENCY)
Since 194 mt of coal shortage could still not be made up for, the electricity-generation opportunity lost due to this — assuming 0.68 kg coal consumption for generating every unit (1 kWh) — would have been to the tune of 285.2 billion units. Further, considering the average cost of power at Rs 4 a unit, the total value of lost generation comes to Rs 1.14 lakh crore.
Putting the two figures together, the total loss due to captive mining shortfall, in value terms, come to a staggering Rs 1.46 lakh crore.
The emails Business Standard sent to the power and coal ministries for comments on the alarming loss figure did not elicit any response.
According to KPMG Partner Santosh Kamath, the loss figure for the power sector highlights the need for speedy clearances and permits. “The calculation shows the value of time is not adequately recognised or appreciated. This is a loss to the nation. Not all of the Rs 1,46,118-crore loss would be due to delays in clearances — there could be other factors, too — but clearance delays definitely are one of the major reasons,” he says.
The private power sector, on the other hand, does not seem to agree with the analysis. “The coal imports carried out to bridge the shortfall have to be seen only in the cases where projects are ready but mines are not. There are very few such instances,” says Ashok Khurana, director-general, Association of Power Producers.
Since 1993, when the coal mining sector was partially opened for captive production by private firms, the Centre has allocated 218 coal blocks, with reserves exceeding 49 billion tonnes. About half of the reserves have been allocated to the private sector, while state-run power generator NTPC has bagged a 10th of the reserves.
Under fire for alleged irregularities in allocation of coal blocks, the coal ministry has so far cancelled 51 block allocations, based on the recommendations of an inter-ministerial panel that found the companies concerned had not made enough efforts to develop the blocks given to them. Most companies have cited delays in environment and forest clearances and issues related to land acquisition, as well as resettlement and rehabilitation, for their failure in commissioning mines.
Source:- business-standard.com
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