Business Today

Solving the power shortage conundrum

Almost one-third of the power capacity in the country is not generating any electricity due to fuel supply problems.
twitter-logo Prosenjit Datta   Delhi     Print Edition: Oct 12, 2014
Business Today Editor Prosenjit Datta.
Business Today Editor Prosenjit Datta.

At the time of going to press, news was coming in that Prime Minister Narendra Modi would launch his ambitious "Make in India" campaign next week. Companies from across the globe have been invited for the function, and many have indicated they would attend. At the function, the Prime Minister is likely to announce major incentives to make India an attractive destination for setting up manufacturing plants for even global companies. A number of manufacturing hubs are expected to be created because of this programme, bringing in investments, creating hundreds of thousands of jobs, and giving a boost to the economy.

One of the crucial things that can make or break this programme is the availability of power. Reliable, inexpensive and uninterrupted power is an absolute must for a manufacturing unit to function smoothly. (There are others, of course, like tax incentives, land availability for expansion and peaceful labour, but even after all those are in place, manufacturers need to be assured of good power supply.)

The problem is that currently a number of thermal power plants in the country have shut down because they have run out of coal - and there are others which are in a precarious situation because they have just one or two days of stocks left as buffer. Almost one-third of the power capacity in the country is not generating any electricity due to fuel supply problems. Thus, unless the problem of domestic coal production and supplies is fixed - and fixed very quickly - Modi's dreams of making India a global manufacturing hub cannot come true.

The irony is that India has over 300 billion tonnes of fuel as reserves, and this is enough to fulfil our needs for the next 200 years. The issue is that we have been producing less than 600 million tonnes a year of coal from domestic mines, though we need a minimum of one billion tonnes per annum immediately.

Unless the coal crisis is sorted out, the Prime Minister's Make in India campaign will come to nought. And even the economic recovery currently under way could come under strain.

Luckily, Modi seems to have chosen just the right man to solve the coal (and power) mess. Piyush Goyal, Minister of State (independent charge) for Power, Coal and New & Renewable Energy, has already started taking steps on a war footing to tackle the issue. However, as analysts point out, many of the initiatives Goyal has taken are likely to pay off only a year or more from now. And till then, factories will have to manage with erratic supplies and costly backup options.

In our cover story this issue, Assistant Editor Anilesh Mahajan explains the root cause of the coal crisis and the steps Goyal is taking to solve them.

Meanwhile, the stock markets have been on a tear over the past six months. The two main indices have risen by over 35 per cent and have hit lifetime highs. There are plenty of cheerleaders who say that this is a multi-year bull run. They point out that by historical standards, stocks are still trading cheap in many cases. But in every boom, it makes sense to look at what are the risk factors that can spoil the party. The story by Senior Associate Editor Tanvi Varma and Principal Correspondent Shoaib Zaman of Money Today, our sister magazine, looks at both the causes of this bull run as well as things that can stop it in its tracks.

Finally, we are in the process of revamping India's number one business magazine. Over the next few months, you will see many new sections, a sharper focus on big corporate and industry stories, and increased coverage of the hottest trends that are affecting businesses in India and around the globe. I would appreciate feedback from our dedicated readers on what they would like to see included in our content to make Business Today an even better magazine.

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