Friday, 12 June 2015

Costly electricity because of Coal problem

Why in news?
  • Inspite of having 3rd/4th largest coal reserves our electricity costs are high and we have prolonged power cuts in summer.
  • Distribution companies resort to cuts despite abundant supply because they are unable or unwilling to buy power at high prices. Almost similar is the story of state government-run electricity boards or private-sector distribution companies in cities like Delhi, Mumbai and Kanpur. 
  • They find difficult to ask consumer to pay more but consumer also can not be blamed.
  • By and large, power-generation companies in India are efficient — the bidding route through which they enter this sector makes sure of that. Real problem is of coal companies inefficiency and consumer has to pay for that. 
Reasons of problems with coal production and electricity supply
  • Costly coal production, 
  • Low productivity and high wages
    • Output per manshift, that is, the average amount of coal each employee digs out, of Coal India Limited was less than 6 tonnes, 1/3rd of the global average, in 2013-14 but the minimum wages of the employees of the government-run coal mining companies have risen consistently
  • Costly loan servicing for loans taken by companies to build power plants. 
  • The cost of disruption in supplies.

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