SECURING COAL SUPPLY THROUGH INDIGENOUS AND FOREIGN SOURCES

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SECURING COAL SUPPLY THROUGH INDIGENOUS AND
FOREIGN SOURCES

• T.K. Chatterjee
• E.D.(FM),NTPC

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Basic Coal Facts

• Countries Fall under distinct categories due to
  uneven distribution of coal resources
• TierI Countries Self Sufficient or better
  North America Russia
• Tier- II Countries Prime Exporter Australia,
  Indonesia Colombia
• Tier-III Countries Facing possible shortfall
  from indigenous supply India China
• Tier-IV Countries Facing possible shortfall of
  imported Coal Japan, Korea and much of Europe

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World Coal ScenarioTop Ten Hard Coal Producers
in the World in 2007
Source BP, IEA,WEC
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Coal in World Electricity Generation
Source BP,IEA,WEC
5
GLOBAL PRIMARY ENERGY SUPPLY AND TOTAL WORLD
ELECTRICITY GENERATION BY FUEL
Source BP,IEA,WEC
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Coal Reserves in India(as on 01-01-08) Billion
tonnes
Source MOC
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RAW COAL PRODUCTION IN INDIA

• Growth of coal production is 6.0 whereas demand
  for electricity has been growing at an average
  growth rate of 7 to 8 and demand supply gap has
  widened over the years.

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Existing Generating Capacity- Sept, 2009
Fuel wise break-up (MW)
(All figures provisional from
CEA) FOR NTPC COAL BASED-24395MW
GAS BASED 3955 MW
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COAL REQUIRMENT, AVALIABILITY DURING XI PLAN FOR
POWER SECTOR SourceCEA Presentation made on
30.09.09 in the Fuel Infrastructure Meeting under
the Chairmanship of Member(Energy)
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Vision 2017 and beyond..2030
NTPC GROWTH STRATEGY
INSTALLED CAPACITY
MULTI-PRONGED GROWTH STRATEGY

• MULTI PRONGED APPROACH TO CAPACITY ADDITION
• GREENFIELD PROJECTS
• BROWNFIELD EXPANSION
• JOINT VENTURES
• ACQUISITIONS
• DIVERSIFICATION IN RELATED BUSINESS AREAS
• HYDRO PROJECTS
• COAL MINING
• POWER TRADING
• OIL / GAS EXPLORATION
• LNG VALUE CHAIN
• RENEWABLE
• NUCLEAR

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Vision 2017 and beyond..2030
NTPCs Vision By 2017
A 75,000 MW Integrated Power Company by the year
2017
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COAL SUPPLY TO NTPC STATIONS
The graph shows an ever increasing demand for
more coal as NTPC kept on building additional
generation capacity over the years
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In the current year, coal shortage of 20 million
tes is envisaged which NTPC plans to bridge
through import
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Areas of Concern in Eastern Region-I Shortfall
mitigation at Farakka Kahalgaon

• The import supplement required for Farakka
  Kahalgaon is 6 million tonnes. The domestic coal
  availability for Farakka Kahalgaon is 15
  million tes on the basis of assurance of CIL.
• As blending of imported coal with domestic coal
  cannot be increased beyond 15, we need to
  mandatorily tie up 6 million tons of domestic
  coal from CIL. Coal production and evacuation
  arrangements to be expedited at Chuperbhita and
  Hurra C.
• The import requirement would then be reduced to 3
  million tonnes.

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Areas of Concern in Eastern Region-I

• Railway bottle necks for Farakka and Kahalgaon
• Railways are ensuring supply of 10 rakes/day but
  Andal-Saithia and Sahibganj -Kahalgaon single
  line route is congested.
• Less Availability of BOBR rakes is also a concern.

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Eastern Region-I Enablers for Coal sufficiency
at Farakka Kahalgaon

• Coal can be transported through Inland waterway
  no-1 i.e Ganga passes through Farakka, Kahalgaon
  and Barh where NTPCs 03 super thermal stations
  are located. The receiving port for imported coal
  can be Haldia.
• Feasibility of receiving imported coal via IWT is
  being studied
• Availability of more Railway rakes_at_10 rakes a day
  as per their assurance.
• Augmentation of existing unloading infrastructure
  at Farakka to handle 8 railway rakes a day.
• 9 to 10 rakes a day of Total coal on offer from
  Lalmatia to be supplied to Kahalgaon.
• Augmentation of unloading arrangements at
  Kahalgaon-II to handle 9-10 rakes a day.
• Continue Supplying imported coal at Kahalgaon and
  Farakka
• Early Coal Availability from Captive Block of
  Pakri Barwadih
• Early availability of coal from Brahmini mines

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Areas of Concern in Eastern Region-II Shortfall
mitigation at Talcher Kaniha

• Expeditious development of Kaniha mines and MGR
  link to Kaniha wharf wall.
• Railways to assure supply of 7 rakes a day on
  sustained basis.
• Sustained supply of 35,000 TPD from Lingaraj mine
  by MCL.
• Augmentation of present MGR network to facilitate
  Additional number of Railway and MGR Rakes
• Improvement of Surface miner availability/reliabil
  ity from 1 to 3 numbers.
• Supply of Imported Coal to continue.
• Inland water transport route to be explored.

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Fuel Tie up Status for XI Plan projects

• Fuel has been tied up for all projects envisaged
  to come up in the 11th plan except Farakka-III,
  Mauda U2 and VSTPP-IV
• Railway movement clearance has been obtained for
  all 11th plan projects except Vallur-II,VSTPP-IV
  and Muzaffarpur which is awaited.

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Coal Requirement for 11th plan projects
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Coal Requirement for 12th plan projects
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Projected Coal deficit (Gap) for Existing and
projects coming up in 11th and 12th planin the
terminal year 2016-17
The Deficit coal requirement is planned to be met
through captive mining of coal blocks allotted
to NTPC and import Substitution
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Reasons for Coal shortage
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Coal availability scenario for NTPC

• Out of expected coal based capacity addition of
  about 30,000 MW by 2016-17, about 19, 000 MW
  will be on linkage mode and balance 11,000 MW on
  integrated mode.
• The total coal shortage for power sector is
  expected to be about 87 million tes by 2016-17

FUTURE SCENARIO
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Reasons for coal shortage

• The long term linkage for NTPC stations
  correspond to 85-90 PLF level whereas the
  generation target is at 92 PLF.
• Growth in the coal sector not commensurate with
  nations requirement of 8 GDP growth.

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Reasons for coal shortage

• Slow clearance of projects. In some cases linked
  mines are yet to be developed even though the
  power projects have been implemented on schedule.
  This is resulting into under utilization of
  installed capacity.
• Ad hoc coal supply arrangements incurring
  additional expenditure.
• Further burdening of already burdened Rly
  transportation network.

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Reasons for coal shortage

• More focus on open cast mining coal quality
  takes a hit.
• Inferior quality increases coal requirement.
• A huge loss for long distance consumers to
  transport waste.
• Affects the power plant equipment enhancing
  maintenance cost.

QUALITY
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Reasons for coal shortage
Logistic Constraints

• Coal reserves are generally localized.
• Transportation of coal is an issue.
• Judicious rationalization of coal supply not done
  due to various political and other reasons.

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Long term Measures to mitigate coal shortage

• Backward integration into coal mining.
• Resorting to integrated power project with
  captive coal source concept.
• NTPC is contemplating acquiring assets abroad as
  a measure of long term fuel security and to beat
  the current volatility in the coal prices in the
  international market.

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Strategies forCoal Sourcing
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• COAL
• SECURITY

MEDIUM TERM
IMMEDIATE
LONG TERM
DEVELOP CAPTIVE MINING BLOCKS ON FAST TRACK MODE
INLAND WATER TRANSPORT
FUEL SUPPLY AGREEMENT
MINING OF POTENTIAL COAL BLOCKS THRU JV ROUTE
WITH CIL
DEDICATED FREIGHT CORRIDOR
IMPORT
PARTICIPATE IN PORT DEVELOPMENT
ACQUISION OF COAL BLOCKS ABROAD
E-AUCTION
SETTING UP COAL WASHERIES
Bi-Lateral Arrangement over And above ACQ
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Fuel Supply Agreement

• As per NCDP, power utilities to be supplied 100
  of the normative coal requirement with FSA.
  (Normative requirement not frozen so far).
• NTPC has already signed a Model Fuel supply
  agreement with Coal India Limited for 90 coal
  requirement for existing stations of NTPC. The
  process of signing of FSAs for individual
  stations is in progress.

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IMPORT(FIG IN Million Tonnes)

• .

NTPC is partially mitigating its
domestic coal shortage for existing stations by
importing coal through third parties and the
percentage of import coal is Increasing every
year. In the current Financial year NTPC planned
to import 12.5 Million Tonnes
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E-AUCTION

• PROCURE COAL THROUGH
• E-AUCTION FOR ALL NTPC STATIONS AS HAS BEEN DONE
  IN CASE RSTPS FROM SCCL.
• AS PER NCDP, ALL COAL COMPANIES UNDER CIL SHALL
  SELL 10 OF THEIR COAL PRODUCTION THROUGH
  E-AUCTION.
• THE QUANTITIES (MT) PROJECTED BY CIL FOR SALE
  THROUGH E-AUCTION ARE
• ECL BCCL CCL NCL WCL SECL MCL
  NEC CIL
• 08-09 3.1 2.65 4.7 6.125 4.3
  9.6 9.9 0.12 40.5
• 09-10 3.2 2.8 4.9 6.65
  4.5 10.6 11.13 0.12 43.9
• 10-11 4.5 2.85 6.2 6.8
  4.45 10.63 12.2 0.3 47.93
• 11-12 4.6 3.0 7.8 7.0
  4.5 11.1 13.7 0.35 52.05
• Source CIL
• LOBBY FOR MORE COAL SUPPLIES DURING MONSOON
  SEASON WHEN GRAIN MOVEMENT BY RAILWAYS IS LESS
  AND MORE RAILWAY RAKES ARE AVAILABLE IN ORDER TO
  BUILD UP COAL STOCKS.
• EVEN IF WE PROCURE 20 OF THE E-AUCTION QUANTITY
  EACH YEAR, THE QUANTITIES (MT) WORK OUT TO BE
• 
  08-09 09-10 10-11 11-12
• _at_ 20 of E-Auction Qty 8.1 8.78 9.56
  10.41
• (Million Tonnes)

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Coal security-Augmentation of unloading

• NTPC has already started Augmentation of
  unloading infrastructure like Wagon Tipplers at
  pithead stations for absorbing more IR rakes.
• This would enable the stations to absorb more
  coal through railway system.

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NTPC Captive Mining BlocksBackward Integration
Production from Captive mines not likely to
commence in the near future
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ACQUISITION OF COAL BLOCKS ABROAD

• Participate in acquisition of coal blocks in
  prospective countries like Indonesia, Mozambique,
  Australia.
• Leverage government support for tie up with
  interested host country for expeditious
  acquisition and development of mines and
  development of transportation logistics at the
  exporting country.
• This could be a long term Fuel security measure
  and shall also help to partially offset the
  volatility of coal prices in the international
  market.

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DEDICATED RAILWAY FREIGHT CORRIDOR

• Has potential to meet long term Requirement.

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Mitigating Coal Shortage The Way Forward

• Stepping up domestic coal production by
  allotting blocks to central and state public
  sector units and for captive mines to notified
  end users
• Coal Import needs creation of necessary
  infrastructure. Will also put pressure on
  domestic coal industry to be efficient. NTPC has
  imported about 5.43 Mt of coal in 2008-09 and is
  targeting to import more than 12.5 Mt of imported
  coal during 2009-10.
• Amendment in Coal Mines Act to facilitate (a)
  private participation in coal mining for purposes
  other than those specified and (b) offering of
  future coal blocks to potential entrepreneurs.
• Technology for economic exploitation of coal
  lying at greater depths

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MAJOR CONSTRAINTS IN IMPORT

• Two major constraints in the import of coal
  apart from Supply constraints in the
  international coal market are
• Port infrastructure
• Railway infrastructure
• .

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AREAS OF CONCERN

• As per indications, the port development
  projects/plans would fall short of required
  capacity addition to handle thermal coal imports
  of 100 MMTPA.
• These projects are not mapped and positioned
  against Geographical demand centres. Most port
  development projects are along the east coast of
  India and very few on the west coast
• No visible plan of Indian Railways in place to
  cater to the excess cargo to be handled by these
  ports except the dedicated freight corridor
  which in all likelihood would not come before
  2017.
• Plans to expand the railway network to connect
  these ports to inland destinations do not also
  seem to be in place.
• Source CII

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Fuel Security Thinking beyond

• For a utility as large as NTPC, it is imperative
  that we align ourselves completely with the fuel
  business in line with the Vision of becoming a
  fully integrated company by 2017.
• Take fuel as a business.
• Enter partial/ full Coal value chain.
• Formation of a new subsidiary to handle fuel
  business with complete autonomy to source fuel.

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• Thank You