Coal potential much higher than current access

Abir Mahmud

Coal production in South Asia is significant to ensure the region’s future energy security but its resource potential is larger than what is currently being accessed, a study report revealed recently. The region’s fuel dependency can be diverted to coal from imported oil and natural gas for electricity generation. The price of coal has historically been more stable than those for oil or natural gas and help domestic industries, the report noted.

The Houston-based Center for Energy Economics and Arlington based PA Government Services Inc jointly prepared the report that was published in the latest energy security quarterly of the USAID sponsored South Asia Regional Initiative for Energy (Sari/Energy). Energy security of South Asia can be significantly enhanced if domestic coal resources can be developed, coal imports can be increased and a regional power pool can facilitate electricity trade supported by a diverse generation portfolio of coal, hydro, natural gas and renewable, the report noted. India is a major producer and importer of coal and has about 10% of the world’s total reserves in South Asian region that also comprises Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.

Though the present proved reserves in Pakistan, Bangladesh, Afghanistan and Nepal are quite small those have long life, as production is also very small, the report pointed out. Indian reserves are mostly anthracite and bituminous coal while Pakistan has mostly lignite. In Bangladesh, domestic production is high quality bituminous used in power generation, while lower quality imported coal is used in brick kilns and steel re-rolling mills. Currently all countries in the region, including India, are net importers of coal. Although most of coal imports in the region consist of coking coal, primarily for steel industry, increasingly more coal is imported for power generation. Only India has a high share of coal-fueled power generation (over 53%).

The share of coal in Pakistan’s energy balance has fallen at least five-fold since 1958 to 7% in 2006, and coal-fired generation represents only 0.2% of the total electricity production in the country. The only coal-fired power plant in Pakistan is the 30-MW plant in Lakhra. In Bangladesh only the 250-MW mine mouth plant at the Barapukuria mine is operating since January 2006, accounting for a little over 5% of generation in the country. Both Pakistan and Bangladesh relied on domestic natural gas for meeting their growing energy needs. But depletion in existing fields and delays in new exploration and development investment limits the growth potential for natural gas. The study said that coal consumption by power sector in India would grow by 2.4% per year to 506 Mt in 2030, with additional 104 gigawatts (gw) of net coal-fired electricity generation capacity to be built during this period.

The Integrated Energy Policy Committee of India has recently made a multi-scenario forecast on domestic coal demand until 2032 next. The Indian projected demand is 2.7 billion tons under the dominant coal scenario, 2.02 billion tons under the reference case and 1.4 billion tons under the low coal scenario. Under all scenarios lignite is assumed to constitute about 2-3% of total coal demand. Under the reference case the near-term demand is expected to grow 32% by 2012. In order to cover the gap between projected demand and supply, India is expected to import about 100 Mt in 2011-2012, more than doubling from 2006.

Pakistan plans to increase coal production from less than four Mt to 20 Mt by 2015 primarily using the Thar basin deposits. Similarly, Bangladesh aims to increase production from current one Mt to 20 Mt within the next decade, the study says. In India, exploration activity has been carried out almost exclusively by the central mine planning and design institute limited. Although Pakistan allowed private companies to operate in the coal-mining sector, the country’s coal resources remain underdeveloped. Increasing coal supply in South Asia is faced with several constraints including lack of investment in exploration & development, decreasing productivity in producing mines, inadequate transportation and absence of domestic private sector expertise.

Coal prices and delay in project approvals also hindering coal sector growth in South Asian region. Pointing to infrastructure constraints the report pointed out that South Asian countries are yet to establish sufficient rail or riverine coal transportation systems. Coal transportation in India by rail has been steadily decreasing over the last few years. The country’s railroad system is overloaded and accommodation of additional coal freights might represent a challenge. Bangladesh Rail, in contrast, while moving approximately 3.5 Mt of freight per year over its entire network has significant spare capacity. The report also opined that increasing coal-fired generation capacity in South Asia, along with generation based on natural gas, hydro, and renewable such as wind and solar would contribute significantly to meeting growing energy demand in the region and improving the quality of life for the citizens of South Asian countries. These benefits can be enhanced via increased trade of electricity through an integrated grid, or power pooling. Coal, as a relatively cheap base load generation fuel, can provide an anchor for regional electricity trade over this integrated grid.

Source: http://www.weeklyeconomictimes.com/news-details.php?recordID=2279

Date: 26 October 2008, Bangladesh