8th Five Year Plan (Vol-2)
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Agricultural and Allied Activities || Rural Development and Poverty Alleviation || Irrigation, Command Area Development and Flood Control || Environment and Forests || Industry and Minerals || Village and Small Industries and Food Processing Industries || Labour and Labour Welfare || Energy || Transport || Communication, Information and Broadcasting || Education, Culture and Sports || Health and Family Welfare || Urban Development || Housing, Water Supply and Sanitation || Social Welfare || Welfare and Development of Scheduled Castes and Scheduled Tribes || Special Area Development Programmes || Science and Technology || Plan Implementation and Evaluation


Integrated Development of Coal Mines and Associated Infrastructural Facilities.

8.43.1 In the past, development of new coal mines has largely been concentrated in the areas where there are adequate transport and other infrastructural facilities already in existence. This has resulted in the coal fields in other areas not being developed to the extent desirable. During the Eighth Plan, efforts will be made to integrate the development of coal mines and the-associated infrastructural facilities to the maximum extent possible so that exploitation of coal is possible in new advantageous areas.

Demand Supply Management

8.43.2 The major steps required to be taken in this connection are as follows:

  1. To match the field-wise production plans with the requirements of the consuming sectors/ centres both qualitatively and quantitatively, with adequate evacuation facilities.
  2. There has been a persistent shortfall in the availability of coal in the Southern region which cannot be readily met from Singareni. A carefully drawn up action plan has, therefore, to be implemented for coal supply to power stations in the Southern and Western regions. This wiil necessitate movement of large quantities of coal by coastal shipping from the Eastern region to the Southern and Western regions. This in turn, will call for the requisite loading and unloading facilities at the concerned ports. The economics of provision of alternate sources of energy (including the economics of import of non-coking coal) for meeting the requirements of coastal power stations in the West need to be evaluated.
  3. The development of fields like Talcher and Ib-Valley (in Orissa), North Karanpura (in Bihar), Singrauli (in M.P.-U.P.), Singareni (in A ndhra Pradesh) and Wardha Valley (in Maharashtra) is to be given priority for meeting the needs of the power sector . Talcher coalfield will have to supplement Singareni production to meet the coal demand in the South. While Talcher will soon develop into a major source of coal supply in the country during the next decade, Ib Valley will provide the alternate source for supplementing the coal needs of power generation in the Eastern and Southern regions.
  4. Production from sanctioned projects and existing mines needs to be optimised for an appropriate return on investments and for unprovement in productivity.

Implementation of Coal Projects

8.44.1 The reasons for delays in the implementation of coal projects have been identified. The constraints are both external and internal. The external problems are land acquisition, forest and environmental clearance, inadequate and irregular power supply, inadequate infrastructure facilties, law and order problems in certain areas and delay in the supply of major equipment. It is expected that during the Eighth Plan, the project implementation procedures would be further sueasiilined and delays reduced.

Land Acquisition

8.45.1 A number of effective steps have been taken to resolve the problems of land acquisition and expedite forest and environmental clearances. Measures have also been initiated for the satisfactory rehabilitation of oustees, many of whom belong to the tribal and other vulnerable backward communities. To a considerable extent, past delays could be attributed to delays in the finalisation of rehabilitation measures for land oustees in accordance with a set of well defined criteria. A suitable rehabilitation policy to be adopted at the national level has now been worked out and the policy as finalised would need to be clearly and unambiguously adopted for new projects in all the States uniformly in the Eighth Plan not only to mitigate the problems of the land oustees but also to reduce delays in the implementation of major mining projects. In the past, this process has caused unmerited hardship to the oustees. To the extent possible, the new policy should aim at providing an opportunity to the oustees to take advantage of the benefits associated with the projects. The steps to be taken include training of the affected persons and upgrading their skills so that they may be employed within the project or elsewhere. The national rehabilitation policy should also aim at minimising the hardship created to the oustee family.

Environmental Management

8.46.1 The Eighth Plan envisages a major thrust in environmental management in coal mining areas. Large areas of land are required for the development of mines. Such lands are mostly agricultural and forest lands. Considerable damage has already been caused to the environment where mining has been continuing for a long time e.g. West Bengal and Bihar. In order to restore the environment in such areas, precise modalities with regard to funding and institutional mechanisms need to be evolved. During the Eighth Plan, environment management will aim at the following:

  1. Concurrent restoration of land in ongoing and new projects.
  2. Restoration of land and implementation of environmental safeguards in the old worked out areas.

8.46.2 New coal projects should be sanctioned in future keeping in view the vulnerability of the propsed location from the point of view of the environment. The coal industry needs to be strengthened with qualified environmental scientists and engineers to prepare, monitor and implement environment management plans.

8.46.3 An action plan will be drawn up for the old worked out areas for restoration and control of subsidence, particularly in Jharia and Rani-ganj Coalfields. The problem of mine fires in Jharia/Dhanbad which are not only endangering the habitation but also burning out scarce resources of prime coking coal, needs to be tackled immediately. The necessary technological inputs will be identified and provided during the Eighth Plan.

8.46.4 In the long run, it is desirable to have an . independent agency to formulate and implenrnt environment preservation schemes for the cofti and associated sectors. A separate Plan allow-tion for Environmental Measures and Subfidence Control will be provided in the Eighth Plan.

Domestic Fuel

8.47.1 All efforts to promote soft coke as a domestic fuel have failed in successive Plans, resulting in increased dependence on kerosene oil and firewood. The Central Fuel Research Institute has designed efficient chullahs and the CMPDI has developed a process for converting inferior grade coal into Special Smokeless Fuel (SSF), which is much less wasteful and pollution-free than the traditional method of making soft coke. To the extent SSF can be used, it will have the effect of saving Kerosene/LPG which involve foreign exchange outgo. Such new devices and processes will be promoted through an appropriate distribution and pricing policy.

Coal Stocking Policy

8.48.1 Despite the efforts made from time to time, the pit-head coal stocks in the country continued to increase year after year. On the other hand, the stocks at the end of the consumers continue to be at precariously low levels. The main factor contributing to the situation is the problem of movement of coal. Accumulation of pit-head stocks takes place usually in areas having inadequate railway evacuation facilities. Apart from this, the level of coal despatches is generally not uniform throughout the year and the railways have been finding it difficult to absorb the seasonal fluctuation in despatches . In order to ensure that the pit-head coal stocks are reduced to a reasonable level and the requirements of the consumers are met to the maximum extent, it is necessary to coordinate and monitor a number of activities connected with coal despatches. First, increases in coal production will have to be planned for the short-term in areas having adequate rail links. To the extent possible, a portion of the coal movement will have to be carried out by coastal/inland shipping to reduce dependence on the railways. In the case of pit-head power stations, the captive transport network (the MGR system) will have to be fully utilised. To facilitate maximum movement of coal by rail, the coal companies will have to ensure that the level of despatches remain uniform throughout the year. At the consumers' end, adequate facilities for unloading and stocking of coal need to be created at the earliest. Finally, there is a need to open as many coal stockyards as possible in different parts of the country so that adequate stocks could be built up at these locations for meeting the requirements of the consumers at steady levels. Supply and movement of coal will have to be monitored periodically to ensure that the strain on the transportation network may be minimised. In the long run, as already stated there is need to plan the development of coal fields and the infrastructure network in an integrated manner.

Coal Quality

8.49.1 The main problems relating to quality of coal are as follows:

  1. High ash content in the coking coal supplies to steel plants.
  2. Oversized coa! and presence of extraneous matter in supplies to power plants and variations in quality.
  3. Inadequate availability of high grade coal i for industries. I

8.49.2 In the Eighth Plan, these problems are ;proposed to be resolved in the following manner:

  1. Average ash content of washed prime coking coal has been varying around 20 - 22% during the last several years against the stipulated 17% for use in steel plants. A Technical Group set up by the Department of Coal in 1986 has formulated a comprehensive programme to ensure supplies of washed prime coking coal of stipulated ash ' content to steel plants by modification of the existing washeries with the provision of , deshaling plants, fine coal beneficiation, finer crushing of coal, setting up instrumentation/automation systems, ash monitors etc. These modifications will be introduced in all the washeries by 1994-95.
  2. A Coal Preparation Engineering Institute has been set up under CMPDI, Ranchi. This Institute will look after the planning,  design, construction and commissioning of , all future washeries. The Institute will also deal with R and D activities to keep pace  with technological developments taking place in the world.
  3. All coal will pass through Coal Handling Plants, having crushing, screening and sizing facilities.
  4. Electrical/mechanical weigh-bridges will be set up wherever necessary.

Beneficiation of non coking coal

8.50.1 Studies undertaken at the instance of the Planning Commission (1988) have clearly established cost savings by the use of beneficiated non-coking coal in power plants situated at long distances away from the coalfields. Accordingly, the Piparwar project with a raw coal capacity of 6.5 million tonnes per year in North Karanpura (CCL) has already been sanctioned by the Government for coal supply to Dadri and Yamuna Nagar Power Stations. Another project at Kalinga in Talcher with a raw coal capacity of 8 million tonnes per annum was sanctioned in March 1992 for the supply of beneficiated coal to the coastal power stations in the South by rail-cum-sea route. It is expected that for the supply of coal to all future power stations situated at distances exceeding 1000 km. from the coalfields, beneficiation facilities will be set up. The viability of these beneficiation plants can considerably improve if the coal rejects from the beneficiation process can be used in Flui-dised Bed Combustion boilers for power generation.


8.51.1 The poor performance of the coal industry has been attributed to low productivity levels of men and machinery. In spite of increasing mechanisation, the coal industry still employs more than 7 lakh people. Higher productivity levels can be realised through appropriate measures suitable for individual mines. Emphasis needs to be placed on underground mining which is going to play a major role in the long run, and wherein productivity has been especially low.

8.51.2 The productivity target in terms of OMS for underground mines of CIL has been fixed at 0.66 tonnes to he realised by 1996-97 against an achievement of 0.55 tonnes in 1989-90. Specific areas that will be given special attention in this connection are increased availability of coal by using coal cutting and augering machines, introduction of direct shovelling, rationalisation of underground transport, improved underground environment etc. The OMS target of opencast production from Coal India to be realised by 1996-97 has been fixed at 4.32 tonnes against the achievement of 3.08 tonnes in 1989-90. The areas that call for special attention in this regard are: introduction of rapid loading systems and modern communication facilities and conversion of manual and semi- mechanised operations to greater mechanisation wherever warranted. The overall OMS of Coal India to be achieved by the end of Eighth Plan is targetted at 1.65 tonnes against 1.21 tonnes achieved at the end of the Seventh Plan.

8.51.3 The continuing under-utilisation of the capital intensive equipment used in excavation and transport in coal mining is a matter of serious concern. The Eighth Plan will place emphasis on improving the utilisation of such equipment through systematic efforts.

8.51.4 Considering the proportion of opencast mining projects in the pipeline, the relative share of production from underground mines cannot be expected to show any significant increase by the end of the Eighth Plan compared to what was achieved at the end of the Seventh Plan. The share of opencast production was 63% at the end of the Seventh Plan.

Coal Exploration

8.52.1 The long-term exploration programme needs to be oriented towards meeting the demand for coal expected to materialise over a perspective of 15 years. This calls for intensification of regional exploration effort aimed at exploring new areas and promoting discoveries made in the recent years.

8.52.2 In the Seventh Plan, regional exploration effort led to the discovery of potential fields of coking coal in West Bokaro, East Bokaro and SohagpurareaofMadhyaPradesh. Considering the scarcity of coking coal in the country, especially prime coking coal, further promotional exploration will be intensified in these fields so that the scope for formulation of new coking coal projects outside the Jharia coalfield may be taken up for consideration. Exploration will also be intensified in Assam, where coal is reported to have coking propensities and may be suitable for use as blends for use in blast furnaces. Recent regional exploration by the GSI has also indicated several virgin blocks of superior grade coal in a few fields in Madhya Pradesh (Mand-Raigarh, Sendurgarh etc.). Considering the fact that the limited reserve of superior grade non-coking coals are today mostly confined to the Raniganj fields, these areas would also be taken up for further regional/promotional exploration and for the delineation of the potential areas for exploitation. Regional exploration will also be intensified in virgin areas which mostly fall in the command areas of South Eastern coalfields (mainly Talcher and Ib Valley in Orissa). Orissa Coalfields have the potential to supply coal to Southern and Western regions at comparatively cheaper cost of mining if properly developed.

8.52.3 A detailed drilling programme of 20.465 •nkh metres (CIL 15.065; SCCL 5.40) is being targetted for the Eighth Plan. This takes into account the regional and sectoral demand for coal as well as its quality aspects. Modern exploration techniques such as geophysical methods, hydrogeological investigations, geotechnical studies, chemical analysis, coal petrographical laboratory studies will be extensively used for this purpose.

Technology Upgradation in Production and Use of Coal

8.53.1 The various activities relating to conservation will be taken up broadly in the following areas:

  1. Mining Technology - Improvement in the recovery of coal in the process of mining by appropriate choice of mining technologies and stowing by inert material, reorganisation and reconstruction of mines to minimise losses of coal in barriers, recovery of coal standing in pillars as well as control or mine fires to release coal for exploitation.
  2. Coal washing - Introduction of modern methods ofbeneficiation and fuller utilisation of the residuals (in terms of middlings) obtained from beneficiation, agglomeration of coal fines for metallurgical and non-metallurgical uses.
  3. For different consumers of coal, introduction of appropriate modifications in the techniques and technologies currently used by the major consumers (like power, steel, cement as also domestic consumers).
  4. Coal utilisation - To promote the use of coal in industry and household sectors so as to conserve oil, increasing the pace of R and D work on underground gasification which will help in exploiting the coal seams which are both difficult and costly to mine otherwise.
  5. Mine fire control - To control expeditiously and successfully fires which are currently raging in underground coal mining areas. Mine fires in Jharia coalfield are depleting scarce prime coking coal. This is a problem that needs to be tackled urgently.
  6. Sand stowing - Sand is required for stowing for the extraction of coal from underground workings where the exploitation of pillars can become possible only in conjunction with sand stowing.
  7. Other measures - Reconstruction of Jharia Coalfield, diversion ofDamodar river etc., are some of the measures needed to ensure additional release of coking coal.

Financial Performance of the Coal Industry

8.54.1 The Eighth Plan will place emphasis on making the coal industry financially viable and capable of supporting itself.

8.54.2 During the major part of the Seventh Plan, Coal India Limited(CIL) had incurred huge losses. It could earn a marginal profit only during 1989-90. Neyveli Lignite Corpora-tion(NLC), on the other hand, continued to earn profits throughout the Plan period. SCCL, however, continued to incur losses for reasons that were largely beyond its control.

8.54.3 While ihe coal industry should have some freedom to adjust the price structure from time to time in line with the increases in the input costs, the major contribution to the financial viability of the industry should come from improvements in efficiency and productivity.


8.55.1 The industry's main problem is its surplus manpower with low productivity. In the Eighth Plan, the emphasis will be on upgradafion of skills of workers through training to improye their productivity levels.

Mining Electronics

8.56.1 The Seventh Plan duly recognised the need for greater emphasis on electronics in coal mining, mainly from the safety and productivity angles. Some works were initiated during the Seventh Plan and a total electronic system was installed at Gevra opencast mine in South Eastern Coalfield which is one of the largest opencast mines in the country. Greater emphasis needs to be placed on introduction of mining electronics for communications, operational controls etc. in both opencast and underground mines with special emphasis on the safety aspects in the case of underground mines.

Research and Development

8.57.1 The following important R and D schemes will be taken up during the Eighth Plan.

A.Production, Productivity and Safety

  1. Development of new mining methods in underground mining.
  2. Development of techniques/systems for prvention and control of mine fires.
  3. Pilot study on in situ coal gasification.
  4. Slope stabilisation studies in opencast mining.
  5. Development of mining machinery suitable for local conditions.
  6. Coal slurry preparation technique.

B. Coal Benefidation

  1. Simple beneticiation of coal.
  2. Efficient beneficiation of small sized coal.

C. Coal Utilisation

  1. Use of low volatile medium coking coal for metallurgical purposes.
  2. Utilisation of washery rejects.

D. Environment and Ecology

  1. Development of appropriate land reclamation systems for areas degraded by opencast mining.
  2. Development of techniques for monitoring of environmental data.

Safety and Welfare

8.58.1 Safety and welfare of mine workers have always received the utmost attention of the Government during successive Plans as a result of which the average number of fatal accidents per million tonne of production has come down from 9.12 in 1951 to 0.74 in 1990. The non-fatal accident rate has also dropped from 57.4 to 3.08 during the same period. The coal industry should strive to enhance the levels of safety in coal mining operations to the maximum extent possible. This will call for concerted action on a number of fronts. These include safe mining technologies with a proper layout of mines and haul roads, lighting and degasification of mines, telemonitoring system in gassy mines, training of workers, provision of audio visual alarms and installation of mobile equipment. Computer aided total mine management system will be introduced in selected large sized mines to improve both safety and productivity of mine workers.

8.58.2 Efforts will be made during the Eighth Plan to enhance the basic amenities like housing, water supply, medicare, cooperatives, banking and recreational facilities, for workers for which the programme indicated in Table 16 has been drawn up.


Review of the Seventh Plan Programme

8.59.1 The performance ofNeyveli Lignite Corporation (NLC) remained satisfactory throughout the Seventh Plan. The second mine with a capacity of 4.7 million tonnes was commissioned and a project has been taken up for expanding its capacity further to 10.5 million tonnes. With the available capacity of 6.5 million tonnes in the first mine, it was expected that the total capacity would be raised to 17 million tonnes by the end of the Seventh Plan. There has been a marginal slippage in commissioning the expansion stage (4.7 million tonnes to 10.1 million tonnes) and the same is now expected to be completed at the beginning of the Eighth Plan. A production level of 11.24 million tonnes wağ achieved in 1989-90 against a combined capacity of 11.2 million tonnes in the first and seofond mines. In 1991-92, NLC produced 12.54 mil-

Table 16 Social Amenities for Coalmine workers

VI Plan 1.4.85 VII Plan 1.4.90 Vffl Plan 1.4.97
1. 2. 3. 4.
A. Coal India
l.(i)Number of Houses 210913 276978 345751
(ii)Housing satisfaction (estimated percentagi) 32.37 42.00 49.00
2.(i)No. of Hospitals 73 72 87
(ii)No.ofBeds 4106 4546 6935
(iii)No. of Dispensaries 344 378 418
3. Water Supply -Total population covered 1625573 1986469 2438824
l.(i)No. of Houses 24133 35535 60576
(ii)Housing satisfaction (estimated percentagis) 28.02 30.4 50
2 . ( i ) N o . o f Hospitals 5 6 10
(ii)No. of Beds 800 900 1260
(iii)No. of Dispensaries 26 30 41
3. Water Supply -Total population covered 517000 7470000 934500

lion tonnes against a target of 12.32 million tonnes. In addition, 3.27 million tonnes of lignite was produced in 1991-92 in Gujarat in the State sector.

8.59.2 The Seventh Plan assigned a high priority to exploration for lignite especially in the States of Tamil Nadu, Pondicherry and Rajasthan. In Rajasthan, an integrated mine-cum-power project consisting of a mine of 1.7 million tonnes and a power plant of 2x120 MW was sanctioned by Government in April 1991 at Barsingsar in Bikaner District. This project is now being implemented. Regional and promotional exploration have recently revealed encouraging lignite finds in the State of Tamil Nadu outside Ney-veli's leasehold areas.

Eighth Plan Programme for Lignite

8.60.1 Development of lignite in locations far away from the major coal fields in the country will be given a high priority during the Eighth Plan.

Neyveli (Tamilnadu)

8.60.2 Neyveli Lignite Corporation has persevered for a long time to stabilise with the only mine-Mine I with a capacity of 6.5 million tonnes. Mine II, with a capacity of 4.7 million tonnes, was commissioned in the Seventh Plan. The programme of expansion of capacity of Mine II to 10.5 million tonnes was taken up during the Seventh Plan and is expected to be completed in 1991-92. The capacity of the Neyveli lignite mines will thus go up to 17 million tonnes. In addition, Government has sanctioned a Float Machine (1400 litre Bucket Wheel Excavator) for use in Mine I and Mine II to relieve the high capacity machines for major overhaul and to enable the overburden system to work at maximum capacity in a sustained manner. The additional lignite thus available will be utilised for power generation in a new 210 MW unit (zero unit). The downstream power generation units for the expansion of Mine I from 6.5 million tonnes to 10.5 million tonnes stage have been sanctioned and the work is to be taken up in the Eighth Plan. The production from Neyveli is targetted at 18.00 million tonnes in 1996-97, including a contribution of 1.0 million tonnes from float machine. Extensive exploration in Tamil Nadu and neighbourhood areas have delineated potential blocks in Jayakond - racholapuram in Trichy district and Bahur in Pondicherry. Investigations will be further intensified in these and other areas of Tamil Nadu and adjacent Pondicherry.


8.60.3 Based on the exploration carried out during the Seventh Plan, it was considered feasible to start with an integrated mine-cum-power plant project at Barsingsar in Bikaner district. An integrated project comprising of a mine of 1.7 million tonnes capacity and a power plant of 2 units of !20 MW each capacity was sanctioned in April, 1991 under the aegis of Neyveii Lignite Corporation. The project is expected to be commissioned by the end of Eighth Plan. Lignite production in 1996-97 is targetted at 1.5 million tonnes.


8.60.4 With the setting up of a mechanised mine of 1.5 million tonnes at Panandhro, lignite will now be available for power generation and for industrial use. The production in Gujarat is expected to reach a level of 3.5 million tonnes by the end of the Eighth Plan. Exploration for lignite will be intensified by both Central and State Government agencies in the State.

Jammu and Kashmir

8.60.5 Under the aegis of the Department of Coal and the NLC, detailed reassessment of Nichahom lignite has been taken up. Although of low grade, the combustion of these lignite deposits in fluidized bed boilers or otherwise has been considered feasible. Feasibility of mining lignite and power generation will be considered in the Eighth Plan.

Institutional Changes Required in Meeting the Future Challenges

8.61.1 As already stated, coal and lignite constitute the primary energy resource of the country. As part of the long-term energy strategy, the production of coal and lignite needs to be stepped up on a large scale so that their share in the total commercial energy supplies may increase significantly in the country from Ninth Plan onwards. This will indeed be a challenging task for which it will be necessary to review the existing legislative and institutional arrangements and introduce important changes during the Eighth Plan.

Plan Outlay

8.62.1 Keeping in view the increase in demand for coal and lignite and anticipated production requirements during the Eighth Plan, an outlay of Rs. 10507 crores is provided for this sector This excludes the outlay for the power component of Neyveii Lignite Corporation. The detailed breakup of the outlay is given below:

Rs. Crores

1 .Coal India Limited 8520
2 .Singareni collieriesCo. Ltd. 1000
3 .Neyveii Lignite Corp.(Mining) 800
4 .Science and Technology 87
5 .Regional Exploration 25
6 .Environmental Measures and Subsidence Control 75
Tota',(Coal and Lignite) 10507

The outlay for Singareni Colleries Co. Ltd. excludes Andhra Pradesh State Govt. 's share of equity.


8.63.1 Reliable and adequate supply of electricity will be of critical importance for effective implementation of the various development programmes in agriculture, industry and other sectors of the economy. With increasing economic activity and development of both rural and urban loads throughout the country, the demand for electricity will continue to rise rapidly during the next decade and thereafter. The major task during the Eighth Plan will, therefore, be to ensure that the anticipated demands are met adequately and in a reliable and cost-effective manner. The Eighth Plan will also have to provide for advance action on a number of new hydel projects so that the declining trend in the share of hydel generation in the total generation capacity in the country may be reversed and a reasonable hydel share ensured at least by the end of the Ninth Plan.

Review of the Seventh Plan Programme and the Annual Plans for 1990-91 and 1991-92

8.64.1 The total installed generation capacity at the beginning of the Seventh Plan was 42,585 MW. This 'comprised 14,460 MW of hydro, 26,311 MW of thermal, 1,095 MW of nuclear and 719 MW of gas-based generation. The details of the capacity added during the Seventh Plan are shown below(Table 17).

8.64.2 The actual capacity addition of 21,401 MW during the Seventh Plan is about 50% nwre than the capacity added during the Sixth Plan.

Table 17 Additions to installed capacity during Seventh Plan

                                                                                    (In MW)




Central State Total Central State Total
sector Sector Sector Sector
Hydro 665 4876 5541 485 3342 3827
Thermal 7950 8049 15999 8573 8520 17093
Nuclear 705 - 705 470 - 470
Windmill - - - - 11 11
Total 9320 12925 22245 9528 11873 21401

Despite slippages in the case of a few hydel projects in the State sector, the overall achievement was as high as 96% of the capacity addition originally planned for. A few short-gestation gas-based projects totalling upto 1,218 MW which were taken up during the Seventh Plan, largely helped in making up for slippages in the implementation of hydel projects. During the Seventh Plan, the average annual rate of capacity addition was thus of the order of 4,280 MW.

8.64.3 The total capacity addition during 1990-91 and 1991-92 has been 5803 MW, comprising 4702 MW thermal, 881 MW hydel and 220 MW nuclear capacity. This represents a much lower annual rate of capacity addition than in to the Seventh Plan.

8.64.4 Delays in forest and environment clearance of projects, time-consuming procedure of acquisition and transfer of land to the project authorities, delays in the supply of equipment by the suppliers and inadequate financing of projects, especially those in the State sector, are some of the factors that have contributed to time overruns in project implementation.

Reduction in Hydel Share

8.64.5 The share of hydel generation in the total generating capacity of the country declined from 34% at the end of the Sixth Plan to 29% at the end of the Seventh Plan and further to 27.8% at the end of 1991-92. This is likely to decline even further during the next decade or so unless suitable corrective measures are initiated immediately. Hydel power projects with storage facilities provide peak time support to the power system. Inadequate hydel support in some of the regions in the country adversely affected the performance of the thermal power plants during the Seventh Plan.

Increase in the Share of Central Generation

8.64.6 The Centra] sector undertakings viz. the National Thermal Power Corporation (NTPC) and the National Hydro Electric Power Corporation (NHPC) continue to play an important rule in supplementing the efforts of the State electricity undertakings in adding new generation capacity in different parts of the country. The Central share in the total installed generation capacity increased from 16% at the end of the Sixth Plan to 25.3% at the end of the Seventh Plan and further to 26.1 % at the end of 1991-92. The major contribution to this had come from the NTPC.

Increase in the Share of Pit-head Generation

8.64.7 The concept of setting up large pit-head power stations initiated during the Fifth Plan continued to gain ground during the Sixth and the Seventh Plans. The share of pit-head capacity in the total installed thermal generation capacity progressively increased from 10% at the end of the Sixth Plan to 25% at the end of the Seventh Plan. While large pit-head power stations have no doubt helped reduce congestion, of the railway transportation system, they have afco given rise to environmental problems, such as large scale land degradation, changes in land-use pattern, displacement of people, extensive pollution of land, water and air etc. These problems need to be resolved effectively before any further large scale expansion of power generation capacity near the coal fields is taken up.

Performance of Thermal Power Plants

8.64.8 The performance of the thermal power plants registered an overall improvement during the Seventh Plan. The all-India average Plant Load Factor (PLF) increased from 50% at the end of the Sixth Plan to 56.5% at the end of the Seventh Plan. This is largely attributable to the concerted efforts put in by Department of Power, the Central Electricity Authority, the State Governments and the utilities. The Renovation and Modernisation (R and M) programme undertaken in respect of some of the older generation units in different parts of the country contributed substantially to the overall improvement in generation during the last few years. The R and M programme during the Seventh Plan covered 32 thermal power stations comprising 162 units with total a capacity of 13585 MW. The R and M programme specifically aimed at increasing the average PLF of these units by about 6 to 7 percent. Apart from this, progressive introduction of larger sized units in the power system has also, to an extent, contributed to the overall improvement in the performance of the thermal power stations. While this is the position at the national level, the thermal plants in certain regions and States continued to function at unsatisfactory levels. The best thermal plant performance during the Seventh Plan was observed in the Western region, followed closely by the Southern and the Northern regions. The plant performance in the Eastern and North Eastern regions continued to remain unsatisfactory.

Transmission and Distribution (T and D) Facilities

8.64.9 The major portion of the 400 KV network envisaged to be set up during the Seventh Plan was in the Central sector and most of these lines could be commissioned on schedule. However, there were delays in the actual commissioning of 220 KV lines, a major portion of which is accounted for by the State sector. The details of the targets and achievements during the Seventh Plan in respect of major transmission line projects are as shown in Table 18.

T and D Losses

8.64.10 The T and D losses in the power systems throughout the country continued to remain high during the Seventh Plan. The all-India average T and D losses increased from about 22% at the beginning of the Seventh Plan to 22.88% by the end of the Plan. However, in the absence of satisfactory metering arrangements in the case ot agricultural consumers, the level of losses indicated by the States could at best be an estimate of the energy not accounted for in the system. The continuing high T and D losses could be largely attributed to the low investments made on T and D facilities in different States and the extensive lower-voltage distribution network in rural and urban areas. These factors have also contributed to the poor quality of electricity supplies in many areas.

Table-18 Targets and Achievments during Seventh Plan in respect of major (220KV and 400 KV) transmission lines.


400 KV (ckt.km)

220 KV (ckt.km)

Target based on annual programmes


Target based on annual programmes

Actual Achievement

Central 9600 11237 2495 2650
State 3406 2558 12735 10946
Total 13006 13795 15230 13626

Eighth Plan Programme - Priorities

8.65.1 The Eighth Plan will lay emphasis on improvements in the operation of the existing thermal generation units and other plant and equipment, reduction in the technical losses of the power system, improvement in the financial performance of the Central and State electricity undertakings and expeditious project implementation to mimimise time and cost overruns. The Eighth Plan will place considerable emphasis on improving the reliability of power supplies to consumers in different parts of the country and promote access to the benefits of electricity in rural areas, especially for agricultural consumers. During the Eighth Plan, advance action will be initiated on a sufficient number of new hydel projects to ensure that the share of hydel generation in the total installed generation capacity reaches a level of around 40% by the end of the Ninth Plan. riod.This implies a gross generation requirement of 433,610 Mkwh after taking into account the the system and auxiliary losses of the order of 23 per cent and 7.5 per cent respectively as obtained during 1991-92.

8.65.3 The rate of capacity utilisation, for the total installed generation capacity in position, realised in 1991- 92 was 4160 kWh/kW. If this rate of utilisation of capacity is maintained during the Eighth Plan, the installed capacity requirement in 1996-97 works out to nearly 1,04,235 MW. This requires a capacity addition of about 35,153 MW during the Eighth Plan period.

8.65.4 Keeping in view the status of the ongoing, sanctioned and new projects in the pipeline, it is assessed that a capacity addition 01' the order of 30,538 MW would be feasible during the Plan period as per the details indicated in Table 20.

      Table 19 Demand for power in 1996-97 as per 14th EPS

Region Energy Requirement (Mkwh) Peak Load (MW)
Northern 129587 24234
Western 121159 19587
Southern 103191 18150
Eastern 56011 10254
North-Eastern 6169 1388
Andaman and Nicobar Isl. 140 39
Lakshadweep 17 4
All India 416274 73656

Capacity additions required during the Eighth Plan

8.65.2 According to the 14th Electric Power Survey, the electricity requirement at busbar (utilities only) in 1996-97 will be as shown in Table 19. The sectoral demand estimates of the Planning Commission indicate a consumption requirement of 308,840 Mkwh from the utilities in 1996-97, after suitable adjustment for energy conservation measures during the Plan PC-

Table 20 Benefits From Sanctioned CEA Cleared and New Schemes During Eighth Plan

Source Ongoing/ sanctioned; schemes

CEA Bleared/NewSchemes

Hydro 9131 151 9282
Thermal 15395 4761 20156
Nuclear 1100 - 1100
Total 25626 4912 30538

8,65.5 The capacity additions indicated above will, however, be contingent upon fuel linkages being firmed up and early start of work being taken up on new projects. Based on this, the cumulative generation capacity by the end of 1996-97 will be as shown in Table 21.

8.65.6 Out of the total addition of 30538 MW during the Plan period, 12,858 MW will be added in the Central Sector bringing the share of the Central sector to nearly 32% in the total installed capacity by 1996-97. In the State sector, capacity addition during the Eighth Plants envisaged to be 17,680 MW. This includes a

Table 21 Generatik Capacity Anticipated at the end of the Eighth Plan (M\V)

Hydro' Thermal Nuclear Total
Capacity as on 31.3.1992 19189 48108 1785 69082
Additions during Eighth Plan. 9282 20156 1100 30538
Total Capacity on 31.3.1997. 28471 68264 2885 99620

capacity of 2,810 MW in the private sector tor which no public sector outlay is provided.

8.65.7 Table 21 shows that the share of hydel capacity in the total capacity in the country will marginally increase from 27.8% at the beginning of Eighth Plan to 28.6% at the end of the Eighth Plan. This implies a reversal in the trend observed till now of a declining hydel share. It will be necessary to ensure that the targetted hydel capacity is fully achieved by making special efforts during the Eighth Plan. These efforts should he supplemented by accelerating the development of hydel capacity additions in order to achieve the goal of increasing the share of hydel capacity to 40% by the end of the Ninth Plan as envisaged in the Directional Paper for the Eighth Plan.

8.65.8 It may be seen that there is a gap of 4,615 MW between the installed generating capacity requirement of 1,04,235 MW and the feasible cumulative capacity of 99,620 MW likely to be available by the end of the Plan. The .gaps should be bridged largely through efficiency improvements and demand management. The average thermal Plant Load Factor (.PLF) in the country has already shown an improvement. With the increasing share of more modern and larger size generation units in the power system and continuing emphasis on R and M works, it should he feasible to enhance the level of utilisation of the generation capacity by about 5% during the Eighth Plan. Similarly, with emphasis on system improvement schemes being taken up in rural and urban areas and an overall improvement in the load density in different parts of the country, a reduction of 2-3% in the average T and D losses at the national level should also he feasible. These improvements, taken together, will have the .-ffect of saving about 3000 MW equivalent of new capacity additions during the Plan period, thereby reducing the gap to about 1615 MW. The endeavour should be to bridge this gap to the extent feasible, through appropriate measures of energy conservaton and demand management and balance through additional capacity to be set up in the private sector, as presently envisaged by the Government.

Private Sector Participation

8.65.9 The public sector alone will find it difficult to raise sufficient resources to invest on new power generation projects for meeting the rapidly increasing demand for electricity in the coming years. The Eighth Plan, therefore, places considerable emphasis on attracting private investments for power development. The major changes in policy announced recently by the Government are expected to promote private sector participation in power development in the coming years. As already stated, the feasible addition of 30,538 MW during the Eighth Plan includes 2,810 MW of private sector projects. It is expected that about 3,000 MW of additional capacity will materialise over and above what has already been envisaged as indicated above in the private sector during the Plan period. This will supplement the capacity additions in the public sector.

Renovation and Modernisation Programme

8.65.10 The R and M programme for rehabilitating the ageing thermal and hydel units initiated in the Seventh Plan will he enlarged in its scope to cover T and D systems and will be pursued further during the Eighth Plan. Th;s programme is expected to be implemented within the first 2-3 years of the Plan period for yielding early benefits. While the CEA and the Department of Power will provide the necessary technical and administrative support, the Power Finance Cor-poration(PFC) is expected to play an important role in financing the programme.

8.65.11 Within the existing 120 hydro power stations under operation in the country with a total installed capacity of 15,200 MW, 49 power stations of a capacity of 8,834 MW have been identified for coverage under R and M to yield an additional peaking  capacity of 500 MW and energy generation of 300 Mkwh annually.

Integrated operation of the regional power systems

8.65.12 The country is at present facing a peaking shortage of the order of 20% which is likely to persist till such time that adequate capacity can be added for meeting the rapid growth in demand for electricity. In a regime of shortages, proper grid management becomes vital. There is urgent need for agreement among the constituent members of each region for observing grid discipline while managing the load in their respective systems to facilitate integrated operation of the regional power systems. This can be achieved through financial incentives including a two-part time-of-day tariff system. Appropriate price policy can also play an important role in levelling off peak demand.

Reduction in T and D losses

8.65.13 The distribution systems in the country are overloaded and are quite inadequate to handle the increasing load demands. The quality of power supply to the consumers has been far from satisfactory and the T and D losses have been on the increase. The T and D losses comprise of two components.

a) Technical losses;

b) Losses due to theft and other factors unaccounted for.

8.65.14 The technical losses are due to energy dissipation in the transmission and distribution lines, transformers and other equipment used in the system. The other losses are caused by meter-reading errors, defective meters, unme-tered supplies and pilferage of energy.

8.65.15 Various steps were initiated during the Seventh Plan to reduce T and D losses. Theft of energy was made a cognizable offence under the Indian Electricity Act, 1910 which provided for stringent punishment of all offenders. The Department of Power had introduced in 1989 an incentive scheme for the reduction of T and D losses. Upgradation and revamping of urban distribution systems and system improvement schemes in the rural areas had been undertaken for major urban centres with financial support of Power Finance Corporation and Rural Electrification Corporation. The Eighth Plan programme will comprise specific schemes taken up in this direction on a much larger scale. The average T and D losses at the national level remained at 22-23% during the Seventh Plan. Appropriate measures will be initiated during the Eighth Plan to reduce the losses progressively to 15% by the end of the Ninth Plan.

Financial Performance of Electricity Utilities

8.65.16 The financial health of electricity utilities is crucial for the successful implementation of the power development programme during the Eighth Plan.

8.65.17 Under the provisions of the Electricity (Supply) Act, 1948, the State Electricity Boards are required to earn a minimum rate of return of not less than 3% on their fixed assets after fully meeting the fixed and operating costs and interest and tax liabilities. However, most of the SEBs have not been able to comply with this statutory requirement. Many of them have large operating deficits. Apart from operational deficiencies, the tariff structure of many SEBs continues to be irrational involving heavy subsidies which promote inefficient use of electricity. In the case of some State Electricity Boards, despite their good operational performance, their financial performance has deteriorated in recent years as a result of the irrational tariff structure adopted by them.

8.65.18 It is imperative that the utilities generate adequate resources internally to be able to fully cover the fixed and operating costs including interest and other liabilities and have adequate surplus for funding their future expansion programmes.

8.65.19 Apart from the rate of return and profitability, many electricity undertakings are facing liquidity problems as a result of their inability to recover dues from consumers. In many SEBs, the level ofoutstandings has already reached alarming proportions. In turn, these undertakings have also been defaulting on payments to be made to Central undertakings like CIL, NTPC, NHPC, BHEL etc, from "whom they purchase coal, electricity and power equipment.

8.65.20 It is important that an efficiency-oriented tariff structure is evolved for the bulk sale of electricity from the Central undertakings like NTPC and NHPC to the State Electricity Boards to ensure optimum utilisation of the generation facilties in the Central and the State sectors and promote the financial health of both the Central and the State undertakings. A precondition to this is a rational tariff structure to be adopted by the State undertakings in respect of their own consumers.

8.65.21 Special mention needs to be made in this connection regarding the tariff applicable to agricultural consumers. In many States, there is a tendency to provide very heavy subsidies to such consumers. The importance of the agricultural sector is well recognised and all possible support including adequate and assured electricity supply should be extended to this sector. However, the low tariff of electricity used in agriculture has led to inefficiency in the use of nut only electricity but other resources such as water and fertilisers. The prevailing subsidised price structure has acted as a strong disincentive for conservation of electricity. The Conference of State Power Ministers held in September, 1991 resolved that the SEBs should adopt an all-India minimum agricultural tariff and earn a 3% rate of return on their fixed assets. This resolution should be translated into action at the earliest so that the electricity undertakings in the country may function on viable lines. Further details are given in the section on Rural Electrification.

Project Implementation

8.65.22 Even though there was a significant improvement in the rate of capacity addition during the Seventh Plan, there had been appreciable delays in project implementation and consequent cost overruns in both the Central and the State sectors. This is a matter of concern especially in view of the large capacity additions contemplated in the future and the need to optimise the use of scarce resources.

8.65.23 In the case of externally aided projects, the adverse economic implications of project delays are much more serious. The factors responsible for these delays are many and have already been discussed earlier. Some of these factors are outside the control of the utilities themselves. During the Eighth Plan, utmost priority should be given to the streamlining of the project clearance and approval procedures at both the Central and the State levels. A system of delegation of administrative and financial powers should be evolved at various levels to rationalise and streamline the procedures. It is also necessary to ensure that all ongoing projects are fully funded and provided timely financing by the concerned authorities. The extent to which the utilities can improve their internal resource generation will contribute to easing of the problem of timely funding of projects. This is a vital requirement for speedy project implementation during the Eighth Plan.

8.65.24 For timely completion of projects, the most critical factor is an appropriate organisational and management structure. The Department of Power, the State Governments and others concerned should review this aspect critically and take corrective measures.

Small Hydels

8.65.25 Though attention has been focussed on small hydro units from the mid-sixties in the context of electrification of the isolated hill areas especially in the Himalayan region, the progress has been tardy . The potential of small hydels is reported to be about 5,000 MW, against which the installed capacity was only about 220 MW at the end of Seventh plan. The projects likely to yield benefits during the Eighth Plan would contribute about 150 MW of capacity. Several schemes are under investigation and assistance needs to be provided to the States to expedite investigation work so that work on as many small hydel units as possible can be initiated at the earliest. However, these projects are taking a longer time than expected resulting in cost over-runs. The reasons for this need to be analysed and corrective steps taken.

Central Sector

8.65.26 Even though the share of the Central Sector in total installed capacity has gone upto about 25.5% by the end of the Seventh Plan, the operation of the Central sector generating units has not been as smooth as one would have desired. The Central generating units had to back down at times as a result of the States' preference to operate their own units during the off-peak hours. This was partly on account of the deficiencies in the bulk power tariff structure. There were also problems of surplus power from the Central units flowing smoothly to the deficit States due to inadequacies in the transmission systems. Some of these factors have also adversely affected the viability of the Central undertakings. These problems need to be analysed carefully and resolved at the earliest.

Nuclear Power

8.65.27 Self reliance continues to be the thrust area in nuclear power development. Development work on 500 MWe units and the on-going work on Fast Breeder technology will have to be continued with vigour during the Eighth plan. However, a major area of concern in this sector has been the inordinate delays in project implementation and the consequent cost over-runs. It is also necessary to set up adequate support facilities in terms of fuel fabrication and reprocessing.

Captive Power Generation

8.65.28 During the Seventh plan, the captive power generation capacity increased from 5,120 MW to about 6,487 MW. The generation actually increased from 12.35 Bkwh to 20.80 Bkwh during the Seventh Plan representing an increase of 68.42 percent. By the end of 1990-91, electricity generation from captive units reached a level of 24.1 Bkwh.

Organisational Structure

8.65.29 In terms of both coverage and size , the operations of the electricity undertakings in the Central and the State sectors have grown phe-nomenally over the years leading to over-centralisation and inefficiencies. There is a need to review the organisational and managerial structure of the industry and take appropriate steps to enable it to accomplish the tasks set out for the future.

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