"Power Sector CPSEs Prioritize Establishing TPPs near Coal Mines and Investing in Logistics"

In response to the surging power demand in India, growing at a rate of six to seven percent per annum, power sector Central Public Sector Enterprises (CPSEs) have received directives to focus on the establishment of thermal power plants (TPPs) near coal mines. Additionally, collaboration with Indian Railways to invest in coal logistics initiatives has been emphasized as part of the action plan formulated after a meeting held in the Prime Minister’s Office (PMO) in June last year.

The strategy aims to address the rising power demand, particularly from the commercial and industrial (C&I) sector and households. Projections indicate that peak power demand is expected to escalate to 366 gigawatts (GW) by 2032, up from 243 GW in 2023. To meet this demand, the central government plans to add a total of 80 GW of thermal capacity by FY32. While 25-30 GW of TPP capacity is already under construction, an additional 50-55 GW needs to be added to ensure a robust power transmission network, especially with the growing penetration of renewable energy.

According to JM Financial, approximately 2,754 megawatts (MW) of thermal capacity was added during April-December FY24, and an estimated 6-8 GW capacity is expected to be commissioned by March 2024. A presentation on the sectoral review of the power sector was made by the Power Ministry in the PMO, with key attendees including Power Minister R K Singh, Power Secretary Alok Kumar, Principal Secretary to the PM, Adviser to PM, Cabinet Secretary, NITI Aayog CEO, and Finance Secretary.

Actionable inputs from the meeting included the imperative to establish TPPs near coal mine pit heads, invest in coal logistics, and expedite the installation of smart meters. It was decided that all upcoming thermal power capacity should be situated in proximity to coal sources. States setting up generation units away from coal mines were identified for immediate review.

The meeting underscored the need to accelerate the awarding of planned TPPs under a mission mode, with a priority on establishing them near coal mines. Furthermore, power sector CPSEs were urged to invest in the development of coal transportation logistics, and arrangements for an appropriate freight rebate with Railways were recommended.

While the Coal Ministry is actively collaborating with Railways to set up 35 crucial rail lines for coal evacuation from Odisha, Jharkhand, and Chhattisgarh, it remains unclear whether power sector CPSEs will be participating in these key projects.

HBL