Coal giant’s progress stifled by red tape

Jindal Steel and Power is still waiting to start digging for coal to fuel its $3.1bn steel and power complex in Orissa, ten years after announcing the project.

Reuters reports that the project is one of several industrial ventures mired in a bureaucratic morass that contributes to the massive power shortages plaguing India, dulling its investment appeal and slowing the growth of Asia's third largest economy.

Coal power plant The obstacles include tardy environmental clearances and complex land acquisitions, as well as populist policies that often mean hefty losses for power utilities.

The Jindal project also now risks being held up by what may become another corruption scandal for Prime Minister Manmohan Singh, after a report by the Comptroller and Auditor General of India (CAG) accused the coalition government of giving up $211bn in potential revenues by selling coal assets too cheaply.

India sits on the world's fifth-largest coal reserves, and produces the most after China and the United States.

But it also imported about 80 million tonnes of coal for power last year and that figure could rise to 400 million tonnes in 2030, research consultants Wood Mackenzie said.

Coal accounts for more than half of India's power generation and will be required for 85 per cent of the 76000 MW additional capacity targeted in the next five years.

But domestic supply has fallen short of targets largely due to regulatory hurdles, and poor infrastructure hinders the transport of imported coal.

The country has a power shortfall which at its peak can hit 11 per cent with frequent power cuts, especially outside cities.

Power shortages are one of the greatest obstacles to developing the Indian economy, the World Bank says, dimming the nation's hopes of competing with China, the world's largest consumer goods manufacturer and its biggest producer of coal.

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