India's dependence on coal for energy to stay

NEW DELHI -- - India's dependence on coal, which meets 52 percent of its commercial energy needs, is likely to continue in the near future as it has vast reserves of the low-cost fuel, energy experts said recently.

India's coal production grew to more than 328 million tonnes in 2001/02 from around 78 million tonnes in 1973/74, making the country the third-largest producer after China and the United States.

"Given its cost advantage and large reserves, indigenous coal is likely to remain the most stable and least-cost option for the bulk of India's energy needs in the forseeable future," L.K. Bose, a former executive director of the state-run Coal India Ltd, told a world mining meet.

Analysts say coal is an attractive option for India which imports 70 percent of its crude oil needs and meets only half its domestic gas demand but concerns of harmful emissions from coal need to be addressed.

"It has to meet environmental expectations and standards for its sustainable growth." Nearly three-fourths of the coal produced is consumed by power plants, which continue to drive coal demand in India.

In five years to March 2007, India plans to add 18,300 megawatts of coal-based power generation against only 7,000 megawatts in the previous five years.

"Over the past 10 years, despite growth in coal demand, increased production and supplies have pushed down the price of coal steadily," said Shashi Kumar, director of Coal India Ltd.

Commercial sources of energy including coal, oil and natural gas, hydropower and nuclear energy account for nearly 60 percent of the country's energy supplies. Wood and biomass account for the rest. Among the commercial sources, coal has a 52 percent share while oil and gas account for 44 percent. Hydropower has a share of two percent while nuclear energy contributes 1.7 percent. India's coal reserves in 2002 were estimated at 234 billion tonnes.

The coal industry is dominated by the state sector, which contributes over 95 percent of the production. Private-sector participation has been allowed only for opening mines for captive consumption by industrial units.