NEW DELHI — Prime Minister Narendra Modi’s government aims to double Indian coal production to 1.5 billion tons by 2020. India needs more fuel to meet rapidly growing demand for electricity.
The Coal Ministry plans to auction 204 coal blocks that the Supreme Court canceled last year. These blocks have the potential to produce 800 million to 900 million tons of coal and generate revenue of about 7 trillion rupees ($121 billion).
Coal Secretary Anil Swarup is leading the auctions, which started in January. “In the first two rounds, 67 out of the 204 coal blocks have been dealt with.”
The 67 blocks are expected to generate about 3.35 trillion rupees in revenue for state governments over the next 30 years. “Besides, there will be 690 billion rupees worth of reverse benefits in the form of [electricity] tariffs,” Swarup told the Nikkei Asian Review.
“So far, we have had two rounds of bidding and one round of allotment,” he said. “The third round will commence in the third week of April for another 16 blocks.” In the previous rounds, he added, 38 blocks were allocated to state-run companies, including energy enterprise NTPC and the Steel Authority of India.
Private companies such as Jaypee Cement, Usha Martin and Aditya Birla group-led Hindalco Industries have also been allocated mines.
“We are looking at 500 million tons [from these 204 blocks] by 2020 and another 1 billion tons from Coal India [the state-run mining company] to meet the target of 1.5 billion tons in five years,” Swarup said.
The Modi government, which came to power in May last year, is desperate to increase coal production to facilitate economic growth. Coal is primarily used in India for electricity generation, though sectors such as the steel industry use the resource at their factories. Coal accounts for 67% of India’s total power generation. The International Energy Exchange projects annual coal consumption in India to grow by 177 million tons, or an average 5% a year, through 2019.
India’s planning authority estimates additional capacity of 75,785 megawatts will be needed by 2017.