(Adds details, analyst comment)
By Nidhi Verma
NEW DELHI, Sept 11 A coal shortage has forced
India to delay plans to expand its electricity production by
nearly 50 percent, a minister said on Thursday, as power supply
bottlenecks threaten to undermine the country's economic growth.
The Indian government has been unable to allocate coal to
new power plants that are meant to generate more than 60
gigawatts of additional electricity, Power Secretary Anil Razdan
told Reuters. Two-thirds of India's power generation is fuelled
"In the last year, no new linkages (allotments of coal) have
been given," Razdan said on the sidelines of a conference. He
did not say how long the power projects had been delayed.
Already plagued by power outages that regularly affect
residential supply due to a lack of generating capacity or poor
transmission networks, officials now fear that a coal shortage
may soon become an even bigger threat.
China has faced a similar problem this year, with
electricity output crippled due to low coal stocks, plus soaring
fuel prices and low power tariffs that have driven many
generators into a loss.
In India, coal shortages have cut India's electricity supply
by two percent, and companies including Tata Power (TTPW.BO),
Reliance Energy RLEN.BO and National Aluminium Co (NALU.BO)
are now scouting to source supplies from foreign mines.
Power generation rose by only 2.3 percent in the April-June
quarter, far slower than the government's target of more than 12
percent, the Economic Advisory Council to Prime Minister
Manmohan Singh said in a report in July.
By comparison in China, where electricity generation has
been growing consistently at double-digit rates since 2002,
output rose only 5 percent in August, its slowest rate this
Coal-fired plants account for 65 percent of India's
generating capacity of 145.6 gigawatts, which lagged demand in
Asia's third-largest economy by nearly 16 percent in July.
POWER SUPPLY CHOKING GROWTH
Economic expansion in Asia's third-largest economy, while
still strong, slowed to 7.9 percent in the June quarter from
more than 9 percent in previous years.
"There is a considerable shortage of power, which is one of
the (factors) that has slowed down ... GDP growth," said D.H.
Pai Panandikar, president of private economic think-tank RPG
Foundation. "This needs to be corrected soon."
The shortage of electricity is also forcing companies and
households to use diesel-fired generators, which helped lift
domestic diesel sales by 18 percent earlier this year and forced
state refiners to import the fuel.
The growing gap between India's coal demand and domestic
production -- which the government expects to widen to 49
million tonnes by 2012 -- is also forcing its coal companies to
State-run Coal India Ltd, the country's biggest coal
producer, will make its debut as an importer this fiscal year,
with plans to buy 4 million tonnes.
State-run NALCO, forced to cut output at its alumina
refinery in July, said last month it planned to import 130,000
tonnes of coal.
Also last month, State Trading Corp of India Ltd (STCI.BO)
issued an import tender for 8.25 million tonnes for its client
NTPC Ltd (NTPC.BO), India biggest power generation company,
which imported 2.5 million tonnes in its last financial year.
(Additional reporting by Surojit Gupta; Editing by Mark
Williams and John Stonestreet)