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India's chronic power cuts eased by Modi's coal turnaround

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World Coal,

India saw a turnaround for Narendra Modi recently who had to battle a power crisis within months of becoming prime minister last May. The reversal came after a surge in output at CoalIndia helped generators amass record stocks. The ramifications of this are that fewer power cuts are likely in India this summer.

Justifying Modi's pitch to voters as the state leader who brought round-the-clock power to industrial Gujarat, fast-track mine approvals, tighter production oversight and more flexibility in coal sales have helped power station stocks recover from a six-year low hit in October.

As Modi prepares to mark his first year in office and seeks to fulfil a poll promise to provide power to all of India's 1.2 billion people by 2019, power stations hold 28 million t of coal, a 38% jump from a year ago, government data shows.

"The situation is improving," said K. Raja Gopal, head of the thermal power business at construction, power and real estate conglomerate Lanco Infratech, poin g to recent growth in Coal India output. "More needs to be done but 8 to 9% didn't happen before."

India is expected to cut imports by a fifth in the fiscal year to 31 March from an estimated 200 million t in the previous year. Power companies have relied on imports for 15% of their coal needs.

India suffered one of its worst blackouts in 2012 due to a shortage of coal plus outdated transmission lines and an over-burdened grid. Power shortages shaved 0.4% off GDP in 2012/13, industry body FICCI estimates.

Coal stocks fell to zero at New Delhi's Badarpur power station last October but now there is enough to last 43 days going into the peak demand season. The situation is similar at many other power plants across India, where over 60% of electricity is generated by coal.

State-controlled Coal India also holds pit-head stocks of 53 million t that can be shipped before the four-month monsoon season starting in June.

The company's output rose 32 million t to 494.2 million t in 2014/15, the biggest volume rise in its four-decade history, Chairman Sutirtha Bhattacharya said. Output is expected to jump to 550 million t in 2015/16 and 1 billion t by 2019/20.

The revival has been spearheaded by Piyush Goyal, an accountant and investment banker picked by Modi to run a power and coal super-ministry with a remit extending from the coal face to household power supplies.

Barely a month into his job, Goyal pushed Coal India to open a long-ready but remote mine in the first big launch in five years.

Operations at the Amrapali mine in the eastern state of Jharkhand were delayed for almost a decade by the lack of a railway link to take coal away.

Now, for the first time in the company's history, Coal India has allowed power companies to pick up coal directly from the mine by truck without signing any long-term fuel supply agreement.

Coal India opened three more big mines last fiscal year and expanded others. The government, meanwhile, set up a website to track mine progress to keep Coal India's bosses on their toes.

But the company will have to deploy technology to improve abysmal efficiency, and private companies will have to follow up on the government's invitation to mine and sell coal, to meet the ambitious goal of doubling production in five years.

India has launched a round of auctions of mines so that private firms can extract coal for their own use, after the Supreme Court last August cancelled more than 200 illegal coal block awards made over two decades.

Edited from source by Joseph Green

Source: Reuters

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