A working plan vital for energy security

A working plan vital for energy security

Energy security in India seems to be passing through a tough phase. On the one hand, the state-owned Coal India (CIL) and Oil and Natural Gas Commission (ONGC) are failing to meet their targets year after year and on the other, India as a country need to go the distance, to make renewable energy economically viable and substantially large enough to meet the ever-growing needs of the country.

Specific to the cement industry, challenges are aplenty when it comes to consistent supply of quality grade coal. The coal sector remains highly regulated under government control, is monopolistic in nature, faces mining and exploration bottlenecks, particularly in underground mining, has attracted low levels of private investments over the years, and faces logistical bottlenecks and technological obsolescence. Even the move to set up an independent Coal Regulator to instil transparency and efficiency in the coal sector, is likely not to contribute much until the Coal Regulator is empowered with a statutory status. The coal quality issues are not likely to be addressed soon, as it is apprehended that Coal India and Singareni Collieries (SCCL) will continue to exploit its market monopoly to dictate one-sided terms of the fuel supply agreement, without giving due consideration to the interest of all stakeholders.

The consistent supply of quality coal to the cement industry certainly plays a major role in containing the production cost of cement to a considerable extent. To meet the fuel requirement of the cement industry, the government could consider the following suggestions:

  • Sanction of long-term linkages against the cancelled LoAs of all other sectors without having any impact on the coal balance position.
  • Allocation of coal blocks, which will not meet immediate requirement of coal as the gestation period of coal production varies from 3-5 years from the date of allocation. Liberalising import of coal without levy of custom duty.
  • Introduction of new players through the public- private partnership mode in the coal sector, which would be beneficial to the sector as a whole.
  • Opening the coal industry by amending the Coal Mines (Nationalisation Act) 1973. The Bill is pending with Parliament. The Ministry of Coal could take up with the government for early passage of this Bill in the Parliament.
  • Relaxation in the terms and conditions regarding disposal of surplus coal from the captive coal blocks.
  • Setting up of a Statutory Coal Regulatory Authority that will act as a watchdog for coal pricing mechanism in India.
  • Single window clearance for coal projects. Need to enhance usage of alternate fuels like petcoke, municipal waste, etc, and waste heat recovery through co-generation by encouraging and incentivising them.

Only if some substantial steps are taken and soon, will the sector come out of the doldrums it is in. At the same time, the industry also needs to work diligently on developing alternative sources of fuel and energy apart from acutioning energy conservation measures.

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