OREANDA-NEWS. May 28, 2015. Coal Minister Piyush Goel has said that domestic coal production will expand rapidly in the next two to three years, removing the need for imports, but this appears highly unlikely.

The Central Electricity Authority has told power producers to import a total 73 million mt coal in the current year, about 35% more than last year, for blending with domestic coal.

There are also power plants designed to run only on imported coal.

India coal imports

Even CIL began to import small quantities of steam coal late last year through government-run trading agencies to meet its commitments under Fuel Supply Agreements with power producers.

MMTC Ltd., for example, has been asked to import 1.6 million mt in the current year.

CIL has a track record of taking up to 10 years to develop new and expanded mining projects, owing to the difficulties of land acquisition, winning environmental approvals and other hurdles.

It is also pushing ahead for legislative changes to facilitate land acquisition.

Comprehensive changes to environmental laws are being considered.

However, the state-level, where administrative clearances are required for mining projects, is still mired in bureaucracy.

As a result, both thermal and particularly coking coal imports are likely to continue rising for some years.

However, they, too, face infrastructural constraints, not just moving coal inland but at ports, some of which already suffer severe congestion.

Adani group has over the past decade built up a big modern port at Mundra, alongside the Special Economic Zone in the Gulf of Kutch in Gujarat.

Mundra has become the largest port in India handling last year over 100 million mt cargo.

The port hosts the world's biggest coal import terminal with 60 million mt/year capacity and a 64-km rail line connecting it to the national railway network.

The West Basin Coal Terminal can accommodate vessels up to 250,000 DWT.

On the east coast, Adani in May last year bought the newly-built Dhamra port in Odisha and announced a second phase of development to take cargo handling capacity to 100 million mt/year by 2020.

Super capsize vessels can also be berthed there.

Coal is one of the main commodities to be handled at the port's six planned dry bulk cargo berths.

Adani group is the biggest coal importer in India.

Over a third of its Rs550 billion revenue in fiscal 2014 came from its coal trading business.

The group is also a big power producer, operating over 11 GW capacity, including 4.6 GW near Mundra port.

It has a target of 20 GW by 2020 and is therefore expanding coal handing terminals at other ports too.

Krishnapatnam, another private sector port built on the eastern coast in the past few years, derives most of its income from rising coal imports.

Coal accounted for nearly 20 million mt of the 24 million mt cargo handled at the port in 2014.

Several power plants in the hinterland of the port require imported coal for blending with domestic coal.

These private ports, which are equipped with modern equipment and the necessary draught to accommodate large size ships, are called 'minor' ports under official classifications.

The 14 'major' ports, all owned by central government, are relatively ill-equipped for coal cargo.

The major ports have poor rail links.

The government in March approved a of joint venture between 12 such ports and railway enterprise Rail Vikas Nigam to improve 'last-mile' connectivity, modernize evacuation infrastructure, and operate and manage the internal port railway systems.

Coal, including coast-to-coast shipment, accounted for about one-fifth of the 482 million mt cargo handled at the major ports in 2014, which demonstrates the significant role played by the 'minor' ports.

Gujarat and Maharashtra alone account for about half of the over 180 minor ports along India's 7,500 km coastline.