1. © LANCO Group, All Rights Reserved POWEREPC INFRASTRUCTURE SOLAR RESOURCES Fuel Supply Issues: An overview

2. © LANCO Group, All Rights Reserved – Significance of Coal as Primary Energy Source – Demand Supply Scenario of Coal – Policy Snapshots – Way Forward Contents

3. © LANCO Group, All Rights Reserved  As on March 2010 Coal the main stay of energy

4. © LANCO Group, All Rights Reserved Source : BP Energy statistics 2010 * Conservative estimate Proved Reserve of Oil-Gas-Coal Position of INDIA as against WORLD

5. © LANCO Group, All Rights Reserved  India having just 0.4% of world’s known oil and 0.6% of natural gas resources but coal reserves is about 7%.  At the present production rate oil and gas is to last for about 22 and 28 years respectively.  India currently mines about 540 mn tones of coal per year and looks forward an ambitious target of reaching 1 bn tone mark by 2020 if the demand has to be met.  The Government of India estimates India has total coal reserves of close to 100 bn tonnes, with total resources exceeding 250 bn Coal-remains as the main stay of energy in India

6. © LANCO Group, All Rights Reserved  However, conservative estimates for - recoverable coal reserves for India are about 60 bn tones  At the present rate of production – proven coal reserve to sustain over 100 years in India  India is the 3rd largest coal producing country after China and USA.  Coal will continue to play a pivotal role in Indian Energy Scenario for the foreseeable future. Coal-remains as the main stay of energy in India (Cont..)

7. © LANCO Group, All Rights Reserved Sl. No. CoalfieldCompany 1.SINGRAULINCL 2. KARANPURA & BOKARO CCL 3.JHARIABCCL 4.ASSAM & MEGHALAYANEC 5.RANIGANJECL 6.IB & TALCHERMCL 7.CENTRAL INDIASECL 8.PENCH & KANHANWCL 9.CHANDA & WARDHAWCL 10.GODAVARI VELLEYSCCL 11.LIGNITENLC 12. LIGNITE, GUJRAT & RAJASTHAN THE MAJOR COALFIELDS OF INDIA

8. © LANCO Group, All Rights Reserved COAL RESERVES IN INDIA STATE-WISE

9. © LANCO Group, All Rights Reserved StateGeological Resources of Coal ProvedIndicate d InferredTotal Andhra Pradesh91946748298518927 Arunachal Pradesh 31401990 Assam348363387 Bihar00160 Chhattisgarh1091029192438144483 Jharkhand3948030894633876712 Madhya Pradesh804110295264520981 Maharashtra52552907199210154 Meghalaya8917471577 Nagaland901322 Orissa19944314841379965227 Sikkim05843101 Uttar Pradesh86619601062 West Bengal1165311603507128327 Total10582012347037920267210 Type of CoalProvedIndicate d Inferre d Total (A) Coking :- -Prime Coking461469905313 -Medium Coking1244912064188026393 -Semi-Coking48210032221707 Sub-Total Coking1754513766210233413 (B) Non-Coking:-8779810961435312232724 (C) Tertiary Coal477905061073 Grand Total10582012347037920267210 Note: All Quantities in Million Tonnes Above details are as on 1 st April 2010 CLASSIFICATION OF COAL RESERVES

10. © LANCO Group, All Rights Reserved FUEL WISE BREAKUP OF POWER GENERATION CAPACITY (as on 30-Nov-2011) FUELMWPERCENTAGE Total Thermal12180565.7% Coal10286355.5% Gas177439.6% Oil12000.6% Hydro3874920.9% Nuclear47802.6% Renewable2016210.9% TOTAL185496100%

11. © LANCO Group, All Rights Reserved – Significance of Coal & Primary Energy availability – Demand Supply Scenario of Coal – Policy Snapshots – Way Forward Contents

12. © LANCO Group, All Rights Reserved TARGET CAPACITY ADDITONS: 11TH – 13TH PLANS All values in MW Additional Coal Requirement ~ 335 MT

13. © LANCO Group, All Rights Reserved SECTOR WISE COAL DEMAND SectorDemand (in million tons) 2011-122016-17 Power (Utilities)460750 Power (Captive)4085 Cement2950 Sponge Iron and Others120135 Total Non-Coking Coal6491020 Coking Coal47105 Total6961125

14. © LANCO Group, All Rights Reserved DOMESTIC COAL SCENARIO 14 INDIAN COAL PRODUCTION - LAST 4 YEARS TARGET GROWTH RATE OVER '10-’11 2007-082008-092009-102010-112011-12 CIL 379.46403.73431.27431.32460.5 7% SCCL 40.644.5450.4351.3347.05 -8% OTHERS 30.4838.9850.3549.42 65.8733% TOTAL 450.54487.25532.05532.07 573.428% Dispatch by CIL 401.46415.96423.77 Stock as at year end45.647.7363.0463.54 Above figures are in Million Tonnes No increase in production over previous year! Expansion fear for Project developers.

15. © LANCO Group, All Rights Reserved INDIAN COAL: Production Vs Dispatch 15 COAL PRODUCTION IN 2010-11 PRODUCER (COAL CO.) 2009-102010-11 GROWTH RATE ECL30.05830.813% BCCL27.512295% CCL47.08347.521% NCL67.6766.25-2% WCL45.73543.65-5% SECL108.009112.714% MCL104.079100.28-4% NECL1.1131.1-1% TOTAL CIL431.259431.320% SCCL50.42951.3332% CAPTIVE BLOCKS, OTHERS50.35449.417-2% ALL INDIA532.04532.070% COAL DISPATCH IN 2010-11 PRODUCER (COAL CO.) 2009-102010-11 GROWTH RATE ECL28.8332.613% BCCL24.8628.7616% CCL44.2849.9913% NCL66.67728% WCL45.4946.482% SECL105.87111.986% MCL98.15116.7519% NECL1.071.2517% TOTAL CIL415.22459.8111% SCCL49.2747.05-5% CAPTIVE BLOCKS43.5465.8751% ALL INDIA508.03572.7313% Almost no increase in production in coalfields nearest to UP

16. © LANCO Group, All Rights Reserved FSAs & LoAs status 30th Apr 2011 16 FSA  Total No. of FSAs – 1599 for a Total Qty of 391 mT  17mT more FSAs to be signed for Power Utilities. Total would become 418mT. LOA  Total No. LoAs issued for 725 consumers for a total Qty of 551 mTpa Of this, 598 Units having coal requirement of 484 mT submitted CG. 569 Units submitted completion of milestones for a quantity of 440 mTpa

17. © LANCO Group, All Rights Reserved There is steadily growing gap between overall coal consumption as against the domestic production. While the production grew at 6.7% the consumption grew over 7.4% annually. It is evident that availability from domestic production is out paced by growing coal demand. Bridging such demand–supply gap will remain a major challenge for the coal sector. Import of coal, focus on indigenous coal production through technological innovation will be the focus areas for the future Demand-Supply Gap

18. © LANCO Group, All Rights Reserved * Revised production target Demand-Supply Gap

19. © LANCO Group, All Rights Reserved CHALLENGING ISSUES 19  Negative Coal Balance position to further widen with future capacity addition  Further recommendations by SLC (LT) withheld due to widening Gap in Demand Supply - 1500 applications seeking linkage of about 3000 Million MT of Coal pending at MoC.  Supply for New consumers under FSA limited to 50% of indigenous coal - No level playing field for new consumers.  Future consumers have no other avenue other than E-auction to procure coal which is limited to around 10% of production.

20. © LANCO Group, All Rights Reserved Alternative Sourcing of Coal 20 SourceIssuesImpact ‘e’ auction CoalLimited AvailabilityIncrease in Price due to demand supply mismatch Imported CoalEquipment Design Price Logistics Limited Blending Higher Variable Charge Quantity Restriction / Price Increase

21. © LANCO Group, All Rights Reserved Variable Cost with Different Fuel Mix 21 # based on current prices* As per Model FSA, trigger level is at 50% Coal TypeEnergy Cost#Fuel Mix Scenario I Fuel Mix Scenario II* Fuel Mix Scenario III [Rs /1000 K Cal][%] Linkage Coal0.4240%50%60% e' auction coal / Open Market 1.3735%30%25% Imported Coal1.5725%20%15% Weighted Avg Variable Cost (Rs/KWH)2.662.392.12

22. © LANCO Group, All Rights Reserved COAL IMPORTS INTO INDIA : HISTORY 22 Total of Indo, SA& Aus Non-Coking Coal Imports into India Year Indonesia South AfricaAustraliaTotal 2005-0612.772.150.1915.11 2006-0714.951.75016.7 2007-0814.934.860.2120 2008-0922.065.770.6228.45 2009-1033.5915.30.148.99 2010-1143.220.30.0763.57

23. © LANCO Group, All Rights Reserved COAL IMPORTS INTO INDIA (Port-wise) 23 Ports Thermal Coal FY 09-10 FY 10-11 Kolkata, Haldia335,6421,336,281 Paradip5,003,4525,746,814 Ennore2,858,0611,364,708 Chennai9,053,2517,110,988 Tuticorin6,870,9156,282,067 Mangalore741,0171,726,047 Goa857,195397,738 Mumbai3,461,5984,945,804 Vizag2,111,4114,345,111 Navlakhi939,9911,416,776 Porbandar665,0001,380,000 Bhavnagar52,1540 Pipavav391,5711,429,545 Cochin148,19420,000 Mundra7,619,32212,678,366 Bedi00 Kandla2,039,8722,854,906 Magdalla1,304,3791,116,149 Dahej070,500 Krishnapatnam1,740,1574,934,678 KaraikalNA1,080,260 GangavaramNA1,928,010 KakinadaNA1,315,668 Others3,270,0003,526,962 Total 49,463,18265,745,415 Growth 33% To Power sector: 29mT Though port capacities has increased phenomenally but Railway capacity has not increased to the required level

24. © LANCO Group, All Rights Reserved – Significance of Coal & Primary Energy availability – Demand Supply Scenario of Coal sector – Policy Snapshots – Way Forward Contents

25. © LANCO Group, All Rights Reserved New Coal Distribution Policy  As per New Coal Distribution Policy (NCDP), 100% of Normative Coal requirement of Power Utilities to be met by CIL (subsequently % was reduced to 90% for landlocked plants in SLC meeting dated 11 th Nov ’08) even through Imports  Though NCDP doesn’t distinguish between old Vs new consumers; However, LoAs for new consumers being issued by CIL with the concept of Incremental Coal Availability Policy Snapshots

26. © LANCO Group, All Rights Reserved  As per prevailing practice, CIL indicates Total Coal Availability for Power Sector for a given year to CEA  Out of this total indicated coal quantity 306 MT of coal is kept aside for power projects commissioned as on 31 st March ’09  Coal Quantity for new Power Projects commissioned after Mar ‘09 - Only additional coal beyond 306 MT being distributed amongst new units by CEA  For FY 11-12, CIL has given 347 MT coal for Power Sector; after keeping aside 306 MT, the effective coal quantity available to Projects Commissioned after Mar ‘09 ~ 41 MT Linkage Coal Distribution Policy Snapshots

27. © LANCO Group, All Rights Reserved Linkage Coal Distribution – Contd. Coal Allocation by CEA for FY 11-12 (Million Tons) Capacity (MW) Remarks TPPs commissioned during FY 09-10 16.65345ACQ for these projects works out to be 23.95 MT TPPs commissioned during FY 10-11 15.905355ACQ for these projects works out to be 23.18 MT TPPs commissioned /to be commissioned during FY 11-12 8.5Expected Capacity Addition ~ 11000 MW Total41 (Incremental) Linkage Coal Distribution by CEA for FY 11-12: Policy Snapshots With this meager coal quantity available for distribution, TPPs have been allocated coal as low as 15% of the Linkage Quantity

28. © LANCO Group, All Rights Reserved Coal will continue to remain as the dominant energy source for India for the foreseeable future. Domestic coal production requires to be augmented by technological up gradation speedy project clearance Effective R&R policy Coal Block allottees to gear up for taking an important role in meeting the demand If the entire coal committed by CIL to Power Sector is to be distributed in equitable manner amongst all power sector consumers – coal realization would be same (70-80% of ACQ) for all Power Utilities (old and new) and will create level playing field for all players in the sector Growth in Logistics remains a constraint for coal transportation – Railways need to gear up for improving rolling stock availability. Port capacity requires augmentation with matching evacuation system Demand side management for efficient coal use is also to be focused. Way forward

29. © LANCO Group, All Rights Reserved