India to reopen abandoned coal mines as heatwave hits supply

India plans to lease abandoned coal pits to private mining companies, a government official said on Friday, in an effort to ramp up production as power outages exacerbate a sweltering heatwave.

Coal supplies more than two-thirds of India’s energy needs and the country has baulked at the cost of transitioning to renewables -- even as unseasonably hot weather illustrates the threat from climate change caused by burning fossil fuels.

Soaring temperatures have prompted higher energy demand in recent weeks and left India facing a 25 million tonne shortfall at a time when coal spot prices have skyrocketed since the start of the year.

“We’ve always believed that coal is a much-maligned sector,” coal ministry official Anil Kumar Jain said at an industry event.

“Earlier we were hailed as bad boys because we were promoting fossil fuel and now we are in the news (because) we are not supplying enough of it.”

The government plans to lease more than 100 dormant state-owned coal mines to private miners on a revenue-sharing basis.

Officials said they will “cut out the red tape” to encourage bids from mining giants Vedanta, Adani and others.

India needs a billion tonnes of coal to meet domestic demand each year.

Most of its needs are met by domestic producers, with a record 777 million tonnes of coal mined in the year to the end of March.

The government says it plans to increase domestic coal production to 1.2 billion tonnes in the next two years to support the country’s post-pandemic economic recovery.

“We are very happy that the economy is on the rebound and power is being demanded. The malls are full, restaurants are full,” Jain said.

Despite a commitment to increase its renewable energy capacity to 175 gigawatts by 2022 and 500 gigawatts by 2030, India’s coal minister Pralhad Joshi said coal needs are set to double by 2040.

“There has never been as much demand for electricity as there is today. There has never been as much heat from the sun as there is today,” Joshi said.

The scheme announced Friday is the government’s latest step towards liberalising India’s mining industry and inviting private companies to profit from the world’s fifth-largest coal reserves.

“This is going to lead the country in the way the mineral-rich countries like Brazil, Canada, Australia, South Africa have been creating wealth and generating employment,” Vedanta mining chief V. Shrikant said.

India has evoked an emergency law in a bid to start generation at some idle power plants running on imported coal which are not producing power because of financial stress or due to high international prices of coal, the government said on Friday.

India is facing its worst power crisis in over six years, and officials have been scrambling to arrange supply for power plants whose pre-summer inventories are at over nine year lows and as power demand is set to rise at the fastest pace in at least 38 years.

Over 43% of the plants fired by imported coal, which have a total capacity of 17.6 gigawatts (GW) and account for 8.6% of India’s total coal power capacity, are currently idle. Officials have also decided to invoke an emergency clause in the country’s electricity law to allow the plants to run.

Power ministry officials will work with those involved in debt restructuring of financially stressed idle plants to make them functional, while a government committee will facilitate passing on higher costs of generation to customers, the government said in an order.

Reuters reported last month about India’s decision to invoke an emergency clause in the country’s electricity law to allow currently idled power plants designed to operate.

Separately, Minister for Ports, Shipping Sarbananda Sonowal on Friday said that the Ministry has identified a total of 567 projects under convergence mode with an estimated cost of Rs58,700 crore.

Addressing the media after the meeting of the National Sagarmala Apex Committee (NSAC), he said Holistic Development of Coastal districts aims to bridge the gaps in infrastructure at the coastal areas and improve economic opportunity. The minister said with addition of projects identified in Holistic Development of Coastal Districts and new project proposals received under Sagarmala, total number of projects stands at 1537 worth Rs6.5 lakh crore. The committee reviewed the progress of the Sagarmala programme and deliberated on various agendas. He said there are 802 projects worth Rs5.5 lakh crore under the Sagarmala programme targetted to be executed by 2035. Out of which, 202 projects worth Rs 99,281 crore have been completed.

He said a total of 29 projects worth Rs45,000 crore have been successfully implemented under PPP model, thus, reducing the financial burden on the exchequer. Additional 32 PPP projects worth Rs51,000 crore are currently being implemented. Further, there are more than 200 projects worth Rs2.12 lakh crore under construction and expected to be completed in 2 years’ time, he added.