With acute coal shortage of domestic coal threatening to destabilise its power generation plans,the power ministry has demanded that the government abolish the custom duty of 5 per cent in the coming Budget on imports of the mineral. In a note to the government on February 11 last,the power ministry pointed out that coal-starved power plants are increasingly securing thermal coal from abroad,the imports of which has shot up to 23.2 million tonnes (MT) in 2009-10 against 16 MT in 2008-09. It argued that with domestic coal in short supply,the utilities have sustained a whooping generation loss of 5.3 billion units in 2010-11 (April-December). The problem is likely to aggravate from 2011-12 in view of inadequate availability of coal from Coal India Limited (CIL) and limitations in blending beyond 10-15 per cent of the total consumption. CIL officials have told the Plan Panel in a meeting on January 27 last that of the total demand of 480 MT in 2011-12,they can only supply 319 MT. This further compounds our problem, the ministry contended. Arguing that imports were indispensable for firing the turbines ceaselessly,the power ministry asked the government to provide cushion to the utilities by doing away with the 5 per cent duty on coal imports. As imports of coal is necessitated mainly due to inadequate availability of coal from domestic sources and it has huge financial impacts on Discoms and consumers,it is recommended that the custom duty on import of coal may be done away with immediately, the ministry said in the note. According to the ministry,coal imports have been steadily going up. The domestic utilities imported 4.5 MT in 2004-05,10 MT during 2005-06,16 MT in 2008-09 before touching 23.2 MT in 2009-10. Maintaining that supply from CIL and other domestic sources could fire power turbines of up to 3,000 MW only,the power ministry warned that new capacity of about 20,000 MW is likely to be grounded for want of domestic coal. Irrespective of the fact that most of the coal-based generation projects under construction during 11th and 12th Plan periods have either been accorded linkages or coal blocks,but the inadequacy of domestic coal was assuming serious proportions,which would available assets stranded for want of coal.
