Economic survey 2023: coal output to jump 17 percent, hit 911 mn tonne

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The economic survey estimates that coal production for FY23 will increase to 911 million tonnes, about 17 per cent higher than the previous year. In April-December 2022, coal production rose 14 per cent on a year-on-year (YoY) basis, and was 21 per cent higher than FY20 (pre-pandemic). “Further, the coal stock at power plants improved to 12 days as of December 2022, compared to 10 days (of stock) as on June 30, 2022, and eight days a year ago,” says the survey.

Simultaneously, efforts are to achieve self-reliance in coal production as coal availability has been a thorny issue. It has posed a serious cost challenge to industry, in general, and thermal power generation units, in particular.

In the wake of rising international coal prices, the power sector curtailed coal imports drastically, from 69 MT in FY20 to 45 MT in FY21, and further to 27 MT in FY22. Domestic coal production could not keep pace with rising demand from power-generating plants.

The government undertook several steps on a priority basis through April and May of 2022 to address the supply constraints. Among the measures were:

· All generators were asked to import 10 percent of their coal requirements (as against 4 per cent earlier).

· Penalties, including curtailment of domestic coal entitlements, were announced if power plants failed to import coal.

· Section 11 of the Electricity Act, 2003, was invoked to direct imported coal-based plants to run at full capacity, with the assurance that their enhanced cost of operation would be compensated.

· Tolling was enabled, which allowed states to transfer their allotted coal to private generators near the mines instead of transporting it to far-away state generators. This move eased the burden on the availability of railway rakes.

· The Rural Electrification Corporation (REC) / the Power Finance Corporation (PFC) and commercial banks were told to facilitate the availability of additional working capital for power generating plants.