India must combine policy cohesion with coal supply efficiency for better economic outcomes

India’s ministry of new and renewable energy (MNRE) recently suggested to a parliamentary panel that it needs a greater role in policy formulation for the electricity sector. No doubt, its remit warrants deeper consultation with the sector’s anchor, the ministry of power (MoP). Solar projects have come up but are unable to despatch electricity on account of inadequate evacuation facilities, a subject that is squarely within the MoP’s ambit.

It oversees transmission plans. However, inter-ministry engagements must be under the Executive’s aegis. The MNRE’s plea to let it directly engage the sector’s regulator—a quasi-judicial authority—for issuing directives cannot be entertained.

Grid responsibility lies firmly with the MoP and regulatory orders should not splinter. Policy cohesion is critical under today’s global circumstances that highlight the need for integrated energy planning, better subsidy management and appropriate regulation. In this context, there are several gaps that could be closed—especially in the coal sector, which accounts for more than half our primary mix of energy sources.

There is much to be desired in smooth supplies of coal to power plants, which supply over 70% of India’s electricity. Coal makes up more than 70% of the cost of such power generation. This burden should be eased to make space for lower consumer tariffs.

Avenues for cost compression exist. About 60% of those plants are located at a distance away from coal mines, requiring railway haulage. But Indian Railways over-charges coal carriage to cross-subsidize passenger travel.

This needs to change. Coal suppliers also need an efficiency overhaul. As Indian coal is burdened with high ash content compared to imports, waste makes up much of