Wednesday, 15 January 2014

Govt taking measures to restrict rising coal imports: Arvind Mayaram

Concerned over the rising coal imports in the country, Economic Affairs Secretary Arvind Mayaram underscored that the government is taking steps in order to improve domestic supplies for reducing coal imports, which account for a substantial amount of the country’s current account deficit (CAD). 

Despite being the world's fifth largest in terms of reserves and third-largest producer of coal, India's domestic output has failed to keep pace with the internal demand over the past few years. At present, Indian domestic coal demand is around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from Australia, Indonesia and South Africa. In the previous fiscal, India imported $16 billion worth of coal.

During the first six months of current fiscal, the import of coal, coke and briquette, among others touched $7.8 billion mark. Therefore, it has become important for the country to enhance domestic coal supplies. Meanwhile, the domestic demand for imported coal is expected to rise further as the government is approving many thermal power projects. Acute coal shortages in the country has become primary reason for power deficit in the country as coal-fired plants account for 57% of India's installed electricity capacity.

Currently, Coal India is the only producer of domestic coal, which is also struggling to meet domestic requirement. Meanwhile, in order to meet India’s growing coal demand, the government has planned to invite bids from private players to start coal mining in a public-private partnership (PPP) mode in the country, which would also end the monopoly of public sector unit Coal India. The government is expected to auction 10 coal blocks in the month of March next year.

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