Prime minister Manmohan Singh is expected to review progress of key infrastructure sectors like power and coal on Wednesday to propel growth in the sector holding the key for rapid expansion of the economy. Domestic coal shortage, which threatens to slow the pace of capacity addition in the power sector and derail the economic growth, is likely to top the agenda of the meeting.
The meeting will also touch upon other contentious issues such as environment clearance for projects and land acquisition and will also identify issues at the state level that are coming in way of development projects.
?Infrastructure deficit could create huge roadblocks on way of higher GDP growth.The review by the prime minister would identify bottlenecks and try push projects that have got stuck,? said an official in the Planning Commission.
One the biggest concerns for the government is putting the country?s power capacity addition on track in view of the acute shortages expected on the coal side.
Facing difficulties in stepping up coal production, Coal India (CIL) has not signed any fuel supply agreement with power generating companies after March 2009. As a result, about 20,000 mw capacity is staring at a serious fuel crisis.
Since CIL is not in a position to step up coal production in the short term, the power ministry has suggested that the public sector coal supplier be asked to divert e-auction coal and also lift coal stocks piled up at CIL?s various pitheads to mitigate fuel shortage to power plants.
The Planning Commission has also supported the power ministry?s suggestions but the coal ministry is opposed to the idea..
Since CIL?s average revenue realisation from e-auction is much higher compared with coal supplied by it against fuel supply linkage, the power ministry has suggested that the public sector company be allowed to hike its coal prices across the board to make up for the loss.
CIL sold about 12%, or 45 million tonnes, of its coal production through e-auction in the financial year 2010-11. Meanwhile, about 70 million tonnes of coal is lying stranded at its various pitheads due to logistical constraints.
The meeting is expected to deliberate over suggestions made by the power ministry to improve coal supplies to the power sector. It has also favoured a dynamic linkage policy where coal can be diverted from to other projects if companies having original linkage is unable to stick to its agreed production schedule.
The meeting will also discuss the ?go? ?no go? issue with respect to mining of coal. While the group of ministers (GoM) is deliberating the issue, it is expected that the PM?s intervention could accelerate the process so that the problem of coal could be eased.
