NEW DELHI: With excess coal becoming an issue of contention in the Sasan ultra mega power project (UMPP) of Reliance Power in Madhya Pradesh, the government has decided to be cautious and allot coal blocks only after a higher degree of certainty about reserves.
The ministry of power is likely to ask government-owned Power Finance Corporation (PFC) for exploration through an outside agency and be prepared with an indicative geological reserve figure at least a month in advance before seeking final bids for UMPPs.
The proposal to involve PFC came up after CMPDIL and MECL, the two agencies that currently conduct preliminary exploration, said they wouldn’t like to do so any more, since their resources were tied up for the next few years. In a recent ministry meeting, PFC was asked to apply for a prospecting licence within three weeks of allocation of coal blocks to the special purpose vehicles created by the company for implementing the projects. Since that could lead to a jurisdiction battle between the ministries of coal and power and delay the Chhattisgarh and Odisha UMPPs, a senior official in the power ministry said a final view was yet to be taken.
The official said the need to do such an exercise was also felt since it would give the bidders a greater degree of comfort while bidding on rates for UMPPs, that each involve generation of 4,000 Mw.
“Sasan is not the only reason for this proposal,” he added.
PFC is the nodal agency for bidding out UMPPs, though the technical support is provided by the Central Electricity Authority. “PFC did not have any role to play in finding the reserves for coal blocks attached to UMPPs. The coal ministry, while allotting the blocks, used to give an indicative figure based upon the level of exploration done in those blocks,” said a senior PFC executive. He said he was not aware of the recent power ministry move.
An empowered group of ministers (EGoM) recently re-endorsed its earlier decision to allow R-Power (an Anil Ambani group-promoted company) to use excess coal from three mines allotted for its Sasan project in its nearby Chitrangi power plant. Tata Power, a rival bidder for Sasan in 2008, contested the government decision in theDelhihigh court, saying the bid conditions were not clear on whether coal could be used for other projects. The court didn’t agree and the case is now being heard in the Supreme Court.
Of the four UMPPs allotted so far by the government, R-Power is implementing three, of which two are pit-head power plants with coal blocks attached. The EGoM kept in abeyance a decision on using surplus coal from mines attached to its Tilaiya UMPP, pending the finalisation of a surplus coal policy, said the power ministry official.
Sasan was allotted three coal mines of a total 750 million tonnes. Initially, only two blocks were attached to the project.
COAL MOVEMENT SET FOR MAJOR CHANGE
Coal transport in the country is set for a major change, and this will happen largely due to changing dynamics of the demand for and supply of coal.
Fuelled by burgeoning energy requirement, inevitable in a growing economy, the coal demand is steadily rising but with no matching increase in production. By the end of the 12th Plan in 2016-17, the country’s coal demand is projected to rise to nearly 1,000 million tonnes (mt) but production to around 750 mt. The gap is to be bridged by import.
At present, the annual coal import is estimated at 130 mt, the bulk of which, over 90 mt, is for the power sector, followed by steel sector, about 30 mt or so, and the balance for other sectors.
By the end of the 12{+t}{+h} Plan, the annual import for the power sector alone might be around 130 mt and for the steel sector another 70 mt, thus totalling more than 200 mt. By 2030, coal import for the power sector alone might rise to 400 mt, according to a UK-based consultant, which is of the view thatIndiawill overtakeJapanas the second largest importer of sea-borne thermal coal. The figure could be higher if the country’s shoddy infrastructure does not improve.
The large-scale import will entail a shift in transport — from ex-colliery to ex-port, rendering port connectivity critical. It is already visible.
Is the railways ready?
The questions which, therefore, arise are: How to ensure faster and efficient evacuation of imported coal out of ports? What is the present state of port-level connectivity? What more needs to be done?
Is the Railways, generally the first choice as a mode for transport of dry bulk, ready for the emerging challenge? Probably not, due to various reasons, mostly related to capacity constraints caused by the resources crunch.
If coal import rises steadily without commensurate increase in the export of bulk commodities, then the Railways will be required to move more empties into the ports and will, thus, add to the cost.
It is already happening now, with the sharp drop in iron ore exports. But then, placing empties at the ports is like placing empties at the mines for loading and in the absence of export traffic, the detention of rakes at the ports is low, reducing the average turnaround time.
Which means if iron ore exports pick up in future, the Railways will move loaded wagons into the ports and will, thus, cut down on costs of moving empties but will face the prospects of more detention of rakes at the ports.
The Railways has in place a logistics plan linking ports with power-generating stations using imported coal but the plan needs an upgrade. For example, a power plant in centralIndiakeen to import coal through an east coast port might be asked to opt for a west coast port simply because it suits the Railways’ plan.
The coal movement to power plants is governed by fuel-supply agreement but no such agreement exists for imported coal. Also, the Railways is still to work out a clear-cut freight movement policy in respect of private ports, many of which, such as Dhamra and Gangavaram on the east coast and Mundra on the west, are handling large quantities of imported coal.
The rail connectivity to these ports is treated as private siding. Capping it all, any import plan is subject to plethora of uncertainties caused by volatility in global prices, fluctuations in exchange rates and irregularity in supplies due to vagaries of weather and unexpected political developments and other factors.
The problems facing domestic coal movement are no less. First, the shortage. For whatever reasons, the targeted coal production could not be achieved in the 11th Plan, unlikely to be achieved in 12th Plan either. In fact, Coal India Ltd itself plans to import coal to bridge the demand-supply gap.
The Korba (Chhattisgarh) and Ib Valley (Odisha) mines served by South East Central Railway, Talcher mines (Odisha) by East Coast Railway and North Karanpura mines (Jharkhand) by East Central Railway have emerged as the major coal loading points.
Even if production of these mines increases substantially, the capacity constraints and inadequate infrastructure will prevent the Railways from transporting seamlessly the increased volumes to meet the requirements of new power plants coming up across the country.
According to one estimate, an additional 65,000 MW to 70,000 MW of thermal power capacity is to be created during the 12th Plan period, pushing up the coal demand by an additional 250 mt . Three railway networks — Mand-Raigad in Chhattisgarh, Bhupdevpur-Manoharpur in Odisha, and Tori-Shivpuri-Hazaribagh in Jharkhand (each about 100-km long) — have been identified to facilitate transport of the projected volume but ,with the Land Acquisition Bill yet to be presented before Parliament, there will be delay in getting land for the projects.
Next, environmental issues and forest clearances are huge stumbling blocks and finally, there has to be convergence of minds of the Railways, CoalIndiaand the State Governments concerned.
Such a convergence — even if it means a win-win for all as the country will get coal, the Railways the additional freight and the State Governments royalty and VAT — may not be easy to achieve.
What then are the options? Road movement is one. Many mines in remote areas not connected by rail are holding large pithead stocks. CoalIndiaplans evacuation by road to reduce the stocks.
Some customers, without waiting for the rake allotment by the Railways, a tardy process, may opt for road movement. But road movement ,despite the advantage of door-to-door delivery, is not without problems. Apart from high cost, pollution, accidents and damage to roads caused by overloading, the transport of coal in trucks entails a much bigger loss to the economy in the form of burning of a costlier fuel to carry a cheaper one. The cost of transport is higher than the value of the cargo.
The Inland Waterways Authority of India has been struggling for the past few years to push barge transport of coal from Haldia to Farakka along the National Waterway 1 (NW1) to meet the requirement of NTPC’s Farakka super thermal power plant inWest Bengal. A private firm has agreed to move 3 mt annually and accordingly signed an agreement. The Waterways Authority has plans for transport of even larger quantities along the route for NTPC’s plants at Kahalgaon and Barh inBihar.
But with poor navigability of the river, multiple handling, non-availaiblity of suitable vessels and absence of shore-based facilities and various other problems, river transport, contrary to general perception, may not be an unmixed blessing.
A clearer picture will emerge once regular movement begins along NW1. One thing is certain: unless the source as well as the consumption point of coal is on the river route, the Waterways Authority will not be cost-effective.
Finally, the potential of coastal movement of coal is not being exploited fully. At present, some movement takes place along the east coast, between Haldia/Paradip/Visakhapatnam and Ennore/Tuticorin to meet the requirement of the Tamil Nadu Electricity Board’s power houses, but the volume is not large and the size of ships, all flying Indian flag, too, are small.
The relaxation of some of the rules might attract new operators with bigger vessels and, thus, boost coastal movement.
No wonder, the future ultra mega power projects, each of the capacity of 4,000 MW, are being set up either on the coast or on the pitheads to avoid probable uncertainty in coal transport.
COAL POWER FIASCO IN INDIA – KARNATAKA’S CASE STUDY
A large number of coal power plants in excess of 700,000 MW (as per one estimate) are reported to be in the various stages of planning, approval and implementation. All these are being claimed as necessary to meet the growing demand for electricity, and most importantly to electrify those houses/villages which are without electricity even after 6 decades of huge growth. Without the processes of due diligence in realistic demand projection, project design, analysis of costs & benefits to the society, approvals etc. these projects have the potential to become a huge liability in view of the need for large tracts of land, fresh water and coal. The social, economic and environmental implications of such projects; lack of adequate public consultations; poor regulatory regimes; inadequate/absence of approval mechanisms, global warming implications etc. should be of major concern to the communities. Unless these issues are addressed objectively, the true potential for social, economic and environmental distress for the vulnerable sections of our society can be massive.
With many such coal power projects being planned for the state, Karnataka can be cited as a case study to highlight some of the contentious issues.
NTPC’s huge size coal power plant near Bijapur, Karnataka (4,000 MW) is scheduled to begin construction shortly. Other coal power projects proposed in Karnataka amounts to about 17,000 MW. In view of the huge deleterious impacts of coal power plants on the social, environment and economic aspects of the state, it is sad that the need for an effective public debate on the costs and benefits to the society as a whole from such power plants is not realised by the authorities. In particular, the total costs and real benefits to our communities of Bijapur power plant need to be analysed as a case study so that the public can decide whether it is in the best interest of the state.
It is critical to note that Karnataka has no known reserve of any type of fossil fuels, including coal, and hence coal for all the coal power plants in the state has to be brought from a far off place. As per well established power plant economics, a coal power plant would be most economical if it is situated either at coal pit head or near the electrical load centre. All the power plants proposed in the state, being neither near a coal mine nor being a major load centre, cannot be suitable sites. For the same reasons the Chief Minister of Karnataka was known to have said some time ago that since setting up a coal power plant in Karnataka is not economical, a coal power plant for the exclusive use of the state was being set up in Chhattisgarh.
It should be highlighted that t he existing coal power plants at Raichur andBellaryin the state are repeatedly getting affected from unreliable coal supply. Even though NTPC may get priority in getting coal supply , the logistics involved in bringing the same from the far off coal fields are immense, as has been experienced in the case of Raichur power plant. NTPC power plants in the country are also reported to be suffering from shortage of coal. Due to various technical, logistics and price related issues adequate coal supply to Bijapur plant cannot be fully assured.
The districts ofNorth Karnataka, where most of these coal power plants are proposed, have been facing water crises since many decades. All the reservoirs such as Almatti, Hidkal, Malaprabha, Tunga Bhadra, Narayanapura etc. in this region, were built primarily to supply water for households and agriculture in the region. Most of these reservoirs, including Almatti, are getting dry generally during summer. If 5.2 TMC/year of water is to be diverted to NTPC plant from Almatti reservoir, how will the people in the districts of Bijapur and Bagalakote be compensated for this quantity of water? One can realistically expect aggravated water shortage and hence popular opposition for diversion of water in summer months since it will result in deprivation of water to the locals.
The Karnataka Government has already identified water as the biggest impediment for industrialisation. About 77% of the total geographical area of the state is arid or semi-arid; drought is a threat to reckon with as two thirds of the state receives less than 50 mm rainfall per annum. Karnataka ranks second inIndia, next only to Rajasthan, in terms of total geographical area prone to drought. 54% of total geographical area of the state is drought prone, affecting 88 of 176 taluks and 18 of the 33 districts. Global Warming is projected to severely impact the state worsening the water problem. Hence the drought prone characteristics of the sate should be a critical consideration for any developmental plan for the state. In this grim scenario, can the state afford to divert 5.2 TMC per year for this NTPC plant? Can we also afford to divert such huge quantities of fresh water for other coal plants?
This NTPC project may need about 3,200 acres of land. Not all of the land identified for this purpose can be said to be unfit for agriculture. The agricultural lands to be diverted for this project will impact the agricultural/horticultural output in the state. Can our state, with a growing population, afford to loose agricultural land for this plant and many other coal power plants planned in the state?
The NTPC plant will burn enormous quantity of coal and generate mountains of ash, particulate matter, huge quantities of CO 2,Sulphurdi-oxide and mercury and many other flue gases. Such a high level of pollution of the environment invariably leads to serious health problems and will affect horticulture and food crops in the two districts. As per media reports this NTPC plant, when fully commissioned, may emit around 800 ton per day ( tpd ) of SO 2 (at 100 per cent load factor, 0.7 per cent sulphur content in coal), 160 tpd of NO 2 and 20 tpd of particulate matter (at 34 per cent ash content, 99.9 per cent electrostatic precipitator efficiency) and around 24,000-30,000 tpd of coal ash. Emission of Mercury is another concern from Indian coal power plants. There appears to be no formal emission standards for SO 2 , NOx and mercury emissions in coal-based power plants. How can the people, flora and fauna in the region face this much of pollution year after year for about 30 years of plant life? Will the resultant pollution of water in Almatti dam and theKrishnariver be acceptable?
Taking into account the constraints of a coal power plant and the requirement for its own use (80% PLF; 10% aux. consumption) , one can expect a daily maximum output of about 2,880 MW on an average. As per reports Karnataka will get 50% of this which will be 1,440 MW. In view of the prevailing losses in Karnataka power system of about 25%, about 1,080 MW only may be available for economic and welfare usage of the state. This much power will be meager when compared to the enormous cost to the state in the form of land, water, pollution, loss of agricultural/horticultural production etc. Similarly, the benefits of other coal power plants also will be meager when compared to the enormous costs to the state.
In this backdrop, a modest understanding of the electricity sector in Karnataka can clearly establish that the state can realise much more virtual additional capacity than 1,080 MW by efficiency improvement measures alone in generation, transmission, distribution and utilisation. As per well established norms these measures are expected to cost only about 25% of the cost of new coal power plants without any other attendant costs such as land, water and pollution. Additionally, the measures like Demand Side Management, energy conservation and widespread use of distributed type renewable energy sources such as roof top solar power, community based bio-mass, hybrid of wind/solar etc. can meet most of the additional electricity demand satisfactorily in the near future. In this context few credible alternative available to the state in order to bridge the gap between demand and supply of electricity should be considered.
Alternative Option 1: Loss reduction in transmission and distribution from 25% to 5% can provide about 1,200 MW virtual additional power. Alternative Option 2: Technical loss reduction in IP sets can provide about 1,100 MW virtual additional power.
Alternative Option 3: Demand Side Management, such as use of CFLs and efficient domestic applicances can provide about 1,100 MW virtual additional power .
It can be noted that each of these alternatives can provide virtual additional power equivalent at much less cost and without impacting the state’s agriculture, water, and environment.
Karnataka also has huge potential in wind, solar and bio-mass energy sources. The true potential of these renewable energy sources can be very huge if they are harnessed effectively in distributed mode such as roof top solar PV panels, community based solar, wind and bio-mass plants. A high level estimate indicates that if on average 1,000 Sq. ft of roof top in each of the 20% of the total households in the state (those houses which are structurally and economically strong) are used to set up solar photo voltaic panels a total solar power capacity of about 20,000 MW can be achieved with virtually nil GHG emission addition, nil water requirement and nil displacements of people. Such roof top solar photo voltaic panels will drastically reduce the energy lost in transmission and distribution, and if connected to the existing grid network can minimise the need for additional conventional power plants. If the roof tops of various types of other buildings in the state such as schools, colleges, industries, offices, ware house etc. also are effectively used the total solar capacity which can be realized will be mind boggling.
An objective consideration of the electricity scenario in the state will reveal that in reality there is no shortage of the electricity generating capacity if we can achieve international standards in the performance of the assets in generation, transmission, distribution and utilization. Hence, efficiency improvement, energy conservation, DSM, and optimum deployment of distributed renewable energy sources will not only enable us to eliminate the deficits, but also will reduce the reliance on conventional power generating sources. In the long term the scope for eliminating the conventional power sources entirely (including the coal and nuclear power) is credible, and hence should be pursued with determination. There is huge potential for this approach to ensure much improved status in social, environmental and economical aspects of the state.
MAJOR ISSUES WITH COAL BASED POWER POLICY
Economic
Puts huge pressure on natural resources such as land, water and minerals; demands a lot of
construction materials like cement, steel, sand; will increase average cost of power; road and rail transportation infrastructures need a lot more strengthening; pressure on ports will increase due to the need for import of coal; land costs around coal power projects will become unaffordable to locals; overall efficiency from coal energy to end use of electrical energy is very poor of the order of about 10% only.
Social and health
Peoples’ displacement will cause additional unemployment & increase in slums; will affect
agricultural production and health; prospect of displacement will create social tensions and stiff opposition; local buildings of heritage importance will degenerate; nearby places of tourist and religious importance loose prominence; causes serious erosion of local community development; livelihood and drinking water needs of the local communities will be threatened. Coal plant emissions contribute to some of the most widespread diseases, including asthma, heart disease, stroke, and lung cancer
Environmental
Safe use for all the ash generated is not available yet; acid rain will affect flora and fauna including forests and agricultural crops; coastal power plants will affect marine creatures; destruction of forest lands to open more of coal mines; have to contend with nuclear radiation in coal ash; credible threat to bio-diversity; fresh water sources will be polluted; reduces the access to fresh water sources near mines; huge contribution to Global Warming and Climate Change; negates the purpose of National action Plan on Climate Change.
These issues are relevant to any state which is planning/operating coal power plants; may be with different magnitude. In the background of all these glaring issues, the public has to decide how prudent it is for the STATE to spend thousands of crores of rupees of its revenue and precious natural resources in establishing coal power plants without first harnessing all the techno-economically viable and environmentally benign alternatives.
At a time when the entire nation is looking to reduce the total Green House Gas (GHG) emissions, and when the state should honestly be looking at credible ways and means of preserving our water resources, fertile agricultural land and tropical forests, the cumulative impact of so many coal based power projects should be objectively studied keeping in view the welfare of all sections of our state.
Keeping all these issues in objective consideration, the state and the union governments should involve all the concerned stake holders in detailed discussions regarding the total costs to the society and benefits from coal power projects, and their true relevance to our society.
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