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Set up CTIT to handle coal imports: Study

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Assocham has advocated setting up of `Coal Trading and Infrastructure Company’ (CTIT) to exclusively deal issue of coal import requirements by planning and implementing such imports on a regular and long-term basis under appropriately designed contractual framework.
The proposed company would sell coal to user industries in the country through a long-term enforceable Coal Supply Agreement and to facilitate this, it should set up huge Regional Coal Dumps located strategically to optimize procurement of both indigenous and imported coal with appropriate connectivity to mines and ports.
In a joint Paper on Indian Coal Industry Scenario, Assocham and E&Y have also pointed out that lifting of mined coal from the coal companies in India and ensuring coal supply to user industries would also be the complete responsibility of the proposed CTIT.
Releasing its findings, Assocham President Dr. Swati Piramal said that coal movement to and from the Regional Coal Dumps could be through a dedicated railway network, owned and managed by the suggested company. The proposed CTIT, besides bring in a sense of competition in the otherwise monopolistic sector, would also open up significant new possibilities of locating very large thermal power generation capacities in the country by establishing radial connectivity with the Regional Coal Dumps, offering the benefits of mine mouth operation.
The suggested entity should also be entrusted with the task of dealing with uncertain demand for coal through procurement of large quantities of coal from the indigenous coal industry under an enforceable Coal Purchase Agreement, stressed Dr. Piramal. According to Assocham and E&Y, coal is a key ingredient in ensuring energy security for India’s growing economy.
Therefore, it is imperative to accelerate the woof efforts by putting in place alternate mechanism for enhancement of coal availability as existing coal corporate system is not enough to take on future challenges and therefore it is necessary to set up the suggested entity.
There is a steady growth in dependence on imported coal in the country, not just for the coking coal but also in case of thermal coal. Coal imports that stood at about 25 million tones in 2003 grew to nearly 50 million tones in the year 2008. Even during the current year, there have been persistent demands for coal imports by user industries, Assocham suggested.
What is obvious is that imported coal which has till now been used primarily to top up the indigenous coal supplies is steadily finding larger role on the energy canvass – it ceases to be stop gap alternative. With the projected capacity creation for power generation in the country and the growth plans for the indigenous coal industry, it would be more prudent to look at coal imports as an option for meeting a significant part of India’s commercial energy needs in coming years
and plan for its imports and usage accordingly.
Given the limitations in blending of imported coal with indigenous coal, it may not be long before India start planning series of coastal power plants, exclusively based on imported coal. In fact, isolated efforts are already on to meet the demand for coal through imports from countries like Australia, Indonesia and others, Assocham said.
Coal purchase from international markets however, has inherent risks like price fluctuations depending on global coal demand. Such risks become more pronounced when quantities involved are huge and for the life of the power plant, Assocham added.

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