Bidders for new ultra mega power projects (UMPP) may not get assured coal supplies from domestic mines. As per the proposed changes in the UMPP policy, all future projects of 4,000 mw capacity will have to rely on imported coal.
The move is aimed at protecting the limited coal resources of the country for providing fuel linkages to small and medium-sized plants, said a power ministry official who is involved in the policymaking, requesting anonymity. He said small and medium plants would not be economical if they were to rely on imported coal.
According to policymakers, future UMPPs should be located in coastal regions to facilitate coal imports. Due to their large size they can achieve economies of scale even after importing coal.
“Earmarking large swathes of coal reserves for UMPPs is not the most productive use of domestic coal. The power sector is already facing shortage of coal to run existing plants. We may, therefore, rework the UMPP scheme,” the official said.
So far the government has awarded four UMPPs to private operators, two based on domestic coal and two on imported coal. Reliance Power-promoted Sasan (Madhya Pradesh) and Tilaiya (Jharkhand) projects are pit-head plants having assured coal linkages from domestic sources. Reliance Power-promoted Krishnapatnam (Andhra Pradesh) project and Tata Power’s Mundra (Gujarat) UMPP are based on imported coal.
The government had planned to begin work on nine UMPPs during the Eleventh Five-Year Plan (2007-12). But various issues, such as availability of land, water supply, environmental concerns and public unrest have prevented the other five UMPPs from taking off.
“We now have some good proposals from states of Orissa, Tamil Nadu and Andhra Pradesh. All these are located in coastal regions and are proposed to be based on imported coal. We may facilitate these projects under the proposed changes in the UMPP scheme,” the power ministry official said.
While Orissa has suggested coastal sites at Ganjam, Dhamara and Sunabeda, Tamil Nadu has suggested a location at Cheyyur and Andhra Pradesh at Kotipalli.
A 4,000 mw ultra mega power project usually requires about 15-16 million tonnes (MT) of coal per annum. This is huge considering that the annual coal requirement of a standalone power project is not more than 10 MT. The power ministry fears that if large number of UMPPs are based on domestic coal, providing the fuel to even existing power plants may become difficult.
Already, close to 40 thermal power plants have reported critical coal stocks, with supplies not enough to meet even seven days’ requirement. The import of coal for use by power utilities is expected to jump from about 18 MT in 2008-09 to about 30 MT in 2009-10.
The country has coal reserves of about 250 billion tonnes, sufficient to meet only a few decades of requirements at current levels of consumption.
SourcE: Economic Times
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