Coal to remain India’s main energy source in coming decades: Govt think-tank

28 Aug 2017

Coal, which powers around three-quarters of India’s electricity, will continue to be the foremost energy source over the coming decades, government think-tank Niti Aayog said in its Three-Year Action Agenda released Thursday.

It is important that India increases its domestic coal production to provide energy security and reduce its dependence on imports, it said.

By 2019, the government will explore 25% of the untapped 5,100 sq km coal bearing area to ensure availability of more coal mining blocks, it said.

There will also be efforts to convert 25% of the 139.15 billion mt of coal reserves that were in the ‘indicated’ category as of March 31, 2016 into the ‘proved’ category by offering top exploration companies attractive contract provisions, the report said.

It also suggested using market mechanisms to open the coal mining sector for commercial mining and allowing specialized mining companies to help improve efficiency in the sector.

“We must also take steps to transition to coal pricing on commercial lines. There is need to end the current practice of segmenting coal markets between power and non-power sectors with subsidies being given to the ultimate intended beneficiary through direct benefit transfer,” it said.

The think-tank has recommended spinning off state-run Coal India Limited’s subsidiaries into separate entities so that each can independently develop its own strategy and business model.

The report also highlighted the critical role of railways in coal distribution. By 2019, the government must complete the three critical railway lines, Tori-Shivpur, Jharsuguda-Barpalli and Mand-Raigarh, to significantly augment coal evacuation, it said.

Coal India has to raise its production to 1 billion mt by 2019-20, while Singareni Collieries Company Limited is seen increasing output to 80 million mt by 2019-20. Production from captive blocks has been targeted at 400 million mt by 2020.

Niti Aayog said yearly targets should be drawn up and, where required, coal mines should be re-allocated to achieve the target. It also suggested that India should, like China, take steps to cut use of low quality coals.