The humongous loss figure has been arrived at by adding the additional cost of coal imported to make good the shortfall with the cost of lost generation of electricity over the past five years.
According to consultancy firm KPMG, the total loss of output from captive coal mines over the past five years stood at 394 million tonne (MT) based on delays with reference to a normative time of 54 months to develop allocated mines. Of this, 200 MT shortfall was substituted by imported coal. Assuming the delivered cost of this coal at Rs 3,980 per tonne, and the cost of domestic coal for a port-based plant at Rs 2,380 per tonne, the additional cost of imported coal works out to Rs 32,000 crore.
The balance shortfall of 194 MT could not be substituted by imports and led to loss of generation. Assuming coal consumption of 0.68 Kilogram for generation of every unit (1 KWh) of electricity, the nation lost 285.2 billion units (BUs) of generation. Further, taking into account the average cost of power at Rs 4 per unit, the total value of lost generation stood at Rs 1,14,000 crore.
Putting the two figures together, the total loss due to captive mining shortfall in value terms adds up to a staggering Rs 1,46,000 crore. E-mails sent to the power and coal ministries seeking comments on the alarming loss figure did not elicit any response.
According to KPMG Partner Santosh Kamath, the loss figure for the power sector highlights the need for increasing the speed of clearances and permits. “The calculation shows the value of time is not adequately recognized or appreciated. This loss is actually a loss to the nation. However, not all the loss of Rs 146,118 crore may be related to delays in clearances as there could be other factors as well. None the less, clearances are a major reason,” he said.
The private power industry does not seem to agree with the analysis. “The coal imports carried out to bridge the shortfall have to be seen only in cases where the project is ready but the mine is not. There are very few such cases,” said Ashok Khurana, Director General of industry body Association of Power Producers (APP).
The government has allocated 218 coal blocks with reserves exceeding 49 billion tonne (BT) to companies since 1993 when the coal mining sector was partially opened up for captive production by private companies. Around a half of the reserves were allocated to the private sector. Around a tenth of the total reserves have been bagged by power generator NTPC alone.
The coal ministry, under fire for alleged irregularities in allocation of blocks, has cancelled allocation of 51 blocks so far based on the recommendations of an inter-ministerial panel that found the efforts made by corporates in developing blocks wanting. Most of the companies have cited delayed environment and forest clearances apart from land acquisition and Resettlement and Rehabilitation (R&R) issues for their failure to commission the mines.
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