A Not-So-Tender Tender
In a rare first, India has decided to import coal from foreign countries on a regular basis. The Coal India Limited (CIL), an Indian Government-owned coal mining and refining corporation, shall call e-tender for this purpose soon. In a statement, the world’s largest coal-producing company has mentioned that it would import 2.416 million tonnes of coal in the initial phase in order to ensure an adequate supply of fuel to power plants in the South Asian country. The CIL would also import 12 million tonnes of coal from abroad in the next 13 months, as the Government of India would build up a stock of coal for avoiding the reoccurrence of power outages.
The Indian power-generation companies have not been interested in using imported coal because of high prices of this non-renewable fossil fuel in the international market. However, power generation has been disrupted due to insufficient supply of coal in the domestic market. After considering the situation, the Indian Ministry of Coal has decided to import coal in order to meet the increasing demand. According to sources close to the ministry, the Government shall reduce the domestic supply, if the State-run and private power companies fail to utilise a certain amount of coal to be imported by CIL. In other words, the Government of India wants private power companies to use imported coal only. Interestingly, the Provincial Governments would have to bear the import cost.
The Government of India has always denied the issue of coal shortage. When India faced coal shortage in October 2021, the Narendra Modi Administration argued that mineral-rich areas of Gujarat, Punjab, Rajasthan, New Delhi and Tamil Nadu had received heavy rainfalls during monsoon that year. Hence, there was a decrease in production. India experienced coal shortage yet again in April 2022. To tackle the power cuts, the Government immediately halted passenger railway services to various places in order to send coal in different parts of the country by freight trains.
The Ministry of Coal has cited three reasons behind the current crisis. Firstly, the demand for electricity has risen due to the increase in economic activities in the post-COVID-19 period. Secondly, the Russia-Ukraine War has disrupted the coal imports, and lastly, the power demand has increased this summer as the mercury has touched 48 degree Celsius in many parts of India. However, the Government did not admit that it failed to anticipate the reasons for the increase in electricity demand in advance. Furthermore, the Government did not explain how it would be possible to increase the volume of imports, as the war between Russia and Ukraine was going on.
India is still largely dependent on fossil fuels for power generation. Interestingly, New Delhi has already set a target to reduce its carbon emissions at the global stage. To achieve the target, India needs to reduce its dependence on fossil fuels, and focus on alternative energy production, such as solar, wind, water and nuclear energy. For that, the country should focus on infrastructure development, research and domestic and foreign investment needs. Unfortunately, the decision to import coal from foreign countries would only increase India’s dependence on fossil fuels. India could have considered the current crisis as an opportunity to move towards a new future.
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