India’s coal sector plays a critical role in the country’s energy ecosystem, given its large domestic reserves and the energy demand from a growing economy. Despite doing good in technology, health, and educational front, India is still facing challenges in the power sector. Power cuts on account of the coal crisis have affected several states such as Gujarat, Rajasthan, Tamil Nadu, Delhi, Andhra Pradesh, etc. What might be the reasons for India’s looming power crisis? Read the article to know more about it.
The energy needs of India are on rising due to the electrification of more houses and new industries coming into being.
Do you think we have a sufficient amount of coal to meet this rising demand as people are moving to a new developmental phase?
How developing the coal sector help the country overcome the present power crisis?
Also read: Mining Sector in India
History of Coal in India
India has a long history of commercial coal mining covering nearly 220 years starting from 1774 by M/s Sumner and Heatly of East India Company in the Raniganj Coalfield along the Western bank of river Damodar.
- However, for about a century, the growth of Indian coal mining remained sluggish for want of demand but the introduction of steam locomotives in 1853 gave a fillip to it. Within a short span, production rose to an annual average of 1 million tonnes (mt) and India could produce 6.12 Mts. per year by 1900 and 18 mts per year by 1920.
- The production got a sudden boost from the First World War but went through a slump in the early thirties. The production reached a level of 29 mts. by 1942 and 30 mts. by 1946.
With the advent of Independence, the country embarked upon the 5-year development plan.
- During the 1st Plan period itself, the need for increasing coal production efficiently through systematic and scientific development of the coal industry was being felt.
- Setting up of the National Coal Development Corporation (NCDC), a Government of India Undertaking in 1956 with the collieries owned by the railways as its nucleus was the first major step towards the planned development of the Indian Coal Industry.
- Along with the Singareni Collieries Company Ltd. (SCCL) which was already in operation since 1945 and which became a Government company under the control of the Government of Andhra Pradesh in 1956, India thus had two Government coal companies in the fifties.
Nationalisation of Coal mines
Right from its genesis, commercial coal mining in modern times in India has been dictated by the needs of domestic consumption.
On account of the growing needs of the steel industry, a thrust had to be given on the systematic exploitation of coking coal reserves in Jharia Coalfield. Adequate capital investment to meet the burgeoning energy needs of the country was not forthcoming from the private coal mine owners. Unscientific mining practices adopted by some of them and poor working conditions of labour in some of the private coal mines became matters of concern for the Government.
On account of these reasons, the Central Government decided to nationalise the private coal mines.
- The nationalisation was done in two phases, the first with the coking coal mines in 1971-72 and then with the non-coking coal mines in 1973.
- In October 1971, the Coking Coal Mines (Emergency Provisions) Act, 1971 provided for taking over in public interest the management of coking coal mines and coke oven plants pending nationalisation.
- This was followed by the Coking Coal Mines (Nationalisation) Act, 1972 under which the coking coal mines and the coke oven plants other than those with the Tata Iron & Steel Company Limited and Indian Iron & Steel Company Limited, were nationalised in 1972 and brought under the Bharat Coking Coal Limited (BCCL), a new Central Government Undertaking.
- Another enactment, namely the Coal Mines (Taking Over of Management) Act, 1973, extended the right of the Government of India to take over the management of the coking and non-coking coal mines in seven States including the coking coal mines taken in 1971.
- This was followed by the nationalisation of all these mines on 1.5.1973 with the enactment of the Coal Mines (Nationalisation) Act, 1973 which now is the piece of Central legislation determining the eligibility of coal mining in India.
Coal Sector in India
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India’s coal sector plays a critical role in the country’s energy ecosystem, given its large domestic reserves and the energy demand from a growing economy.
India is the second-largest coal producer globally, with coal accounting for about 55% of its energy needs. However, while the coal sector is vital for energy security, it faces significant challenges and is under increasing pressure to transition toward cleaner energy.
India has the fourth largest coal reserves in the world. It is estimated to be around 319.02 billion tonnes of which not even 1 billion tonnes is extracted in a year. The majority of extracted coal is used for electricity production. The remaining coal is used for cement, steel and other industries.
The top five states in terms of total coal reserves in India are:
- Jharkhand
- Odisha
- Chhattisgarh
- West Bengal
- Madhya Pradesh
How can the coal crisis lead to power cuts?
Different sources of power production are renewable and non-renewable sources. Non-renewable accounts for coal and non-coal sources (diesel, natural gas). Coal (Thermal base power production) is the major component of entire electricity production.
Other sources such as renewables i.e. wind, solar, etc, are not reliable sources of power. They have their limitations and cannot provide power for 24 hours.
Similarly, non-coal sources of non-renewable sources also have their limitations. Its capacity is not beyond a particular point. In the total amount of electricity, the production of coal constitutes around 70%. This is the reason why the coal crisis led to power cuts.
Coal imports
India is the second-largest importer of coal after China. As per the present Import policy, coal can be freely imported (under Open General Licence) by the consumers themselves considering their needs based on their commercial prudence.
Steel Authority of India Limited (SAIL) and other steel-making facilities import coking coal primarily to fill the gap between demand and supply domestically and to raise the quality.
Non-coking coal is imported by coal-based power stations, cement factories, captive power plants, sponge iron plants, industrial customers, and coal traders.
Read: Coal mining in India
Who is responsible for the exploration and development of coal reserves in India?
The Ministry of Coal is ultimately responsible for formulating policies and strategies regarding the exploration and development of coal and lignite reserves, for approving significant projects with high economic value, and for making decisions regarding all pertinent matters.
These important roles are carried out by the Public Sector Undertakings Coal India Ltd. and its subsidiaries and Neyveli Lignite Corporation India Limited under the administrative supervision of the Ministry (NLCIL).
The Ministry of Coal also has a joint venture with the Government of Telangana called Singareni Collieries Company Limited in addition to Coal India Ltd. and Neyveli Lignite Corporation India Ltd. Governments of Telangana and India both own 49% and 51% of the company, respectively.
Reasons for coal shortage in recent times
- There was a surge in electricity demand due to the revival of the economy after the second wave of COVID-19 declined, along with a limited production of coal.
- Available coal cannot arrive on time due to container shortages because of high imports and exports.
- However, starting in 2021, rising industrial demand, global price swings, and most recently, Russia’s invasion of Ukraine, caused coal prices to soar to all-time highs. All of this has had a significant impact on India’s coal imports.
- The almost depleted thermal power plants are now under additional strain as a result of the increasing heat waves. The country’s electricity demand reportedly reached a record high of 201 gigawatts (GW) on April 26, 2022, as several areas of the nation suffered from extreme heat.
- The nation’s industries, which have resumed operations following the second wave of the COVID-19 epidemic, can be blamed for the unexpected increase in demand. Additionally, despite having the fourth-largest reserves in the world, domestic coal producers cannot keep up with demand.
Conclusion
To liberalise the coal industry the government created (in June 2019) a High-Level Committee under the direction of the Vice-Chairman of NITI Aayog. This HLC issued several significant suggestions (October 2019) for coal block allocations, with the most significant being a paradigm change in which coal was to be viewed as an input to economic growth through the relevant sectors utilising coal rather than as a source of money.
The Indian government wants to accelerate economic growth in the nation’s aspirational regions. Because these States have abundant natural resources, making use of those resources in the coal sector is essential to their growth. The Government of India’s transparent actions and commercial auction of coal mines have come at the perfect time to close the gap between the country’s supply and demand for coal.
Frequently Asked Questions (FAQs)
Q. Who is the largest producer of coal in India?
Ans: The largest coal-producing state in India is Jharkhand, known for its rich coal mines. Chhattisgarh is the second largest, with extensive coal reserves. Odisha also ranks high in coal production, contributing significantly to the country’s coal output.
Read: Thermal Power Plants: UK closes last coal-fired power plant
Article written by: Krishnapriya JR
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