While India is looking to export its surplus coal to Bangladesh because of low domestic demand, the government is trying to come to grips with what has been ailing the country's coal and power sectors, a senior official said on Tuesday.
"Articulation of demand is not happening at the discom (electricity distribution companies) level. Today, railway rakes are available for coal evacuation, but unfortunately, there is no demand," Coal Secretary Anil Swarup said addressing a World Coal Association conference here.
"The focus is on the discoms now. The real problem is not the debt burden of the discoms, but the losses they are incurring...transmission losses and losses on recoveries, among others," he said.
The Coal Secretary explained that while in his sector, the accent on implementation and the "change in paradigm" introduced by the current central government has yielded results in the form of surplus fuel production, the discoms' issues had been left unaddressed for a long time.
"In 2015-16, Coal India acquired 5,000 hectares of land for mining purposes, which is unprecedented in the history of the company," Swarup said illustrating how the state miner had managed to reverse a situation of earlier production shortfalls.
"Instead, things were not being implemented at the discom level. Governments were postponing addressing the crisis year after year," he said.
Referring to the Centre's Uday discoms' debt restructuring scheme, Swarup said the current scheme, although also a postponement of the debt, has certain additional features.
"Today, we're taking the bull by the horns on discoms. They were earlier not being monitored on accountability and parameters, which this government is trying to do," he said.
The current low capacity utilisation of power plants is driven primarily by stressed discoms, which are unable to buy electricity because of weak their financial condition.
Swarup said the central government's Ujwal Discom Assurance Yojana (UDAY) debt restructuring scheme would help improve the financial position of state discoms, which will also have a positive impact on coal demand.
Twenty Indian states and one union territory have given in-principle approval and 16 have already signed up for the scheme, which envisages taking over 75 per cent of discoms' cumulative debt. States would issue loans against the debt at prevailing market rates. The balance 25 per cent would be issued as sovereign backed bonds by discoms.
The scheme also envisages access to cheaper coal, modernising transformers to cut distribution losses, as well as a provision to revise tariffs, which has been criticised by the AIADMK government in Tamil Nadu. Tamil Nadu stands out among states, which have not yet opted for UDAY.
According to US rating agency Fitch, the committed Indian states and UTs accounted for almost 77 per cent of the total net cash losses reported by discoms in fiscal 2014, and around 58 per cent of the total debt outstanding at end-September 2015.