Thermal coal slides 9%, traffic yet to recover at major ports

11 December 2017

Coal traffic shipments, especially thermal coal, are yet to pick up at major ports. The signs of recovery in coal volumes, which were supposed to begin from the second half of this financial year, are still not in sight.

Thermal or steam coal cargo shipped through major ports saw de-growth of nine per cent during April-November. In the same period, coking coal traffic moved up 2.27 per cent, reveals data by the Indian Ports Association.

The slide in thermal coal cargo was due to a lesser volume of imports. Imports of thermal coal have been on a downtrend in the current financial year (FY).

The country is now the second-largest consumer-cum-importer of thermal coal but imports are sliding. During April-October of FY18, thermal coal imports declined 16 per cent to 33.62 million tonnes.

“Coal volumes at major ports would grow after imports gain momentum. The domestic market presents a scenario of tight coal supplies due to supply bottlenecks. This is expected to prompt the industries to buy more imported coal although viability would be an issue”, said an energy sector analyst.

The thermal power plants across states are reeling under coal shortage stress due to unavailability of railway rakes to transport coals from mines to power plants. The government through schemes like SHAKTI (Scheme to Harness and Allocate Koyla (Coal)) and policies have been trying to highlight the need to cut on imported coal for power generation by thermal plants. At the same time, inadequate infrastructure and lack of comprehensive planning has led to the schemes being unable to achieve the desired targets. Rajasthan, Maharashtra, Karnataka and Andhra Pradesh have been highly affected by the coal shortage.

Data by the Central Electricity Authority (CEA) shows at the end of October, power plants with an aggregate capacity of 25,000 megawatts are saddled with coal shortage as 14 plants face supercritical stock of coal inventory. Another nine plants have less than seven days of coal stock and are categorised as ‘critical’. Coal shortage has been more glaring after August due to drop in hydro and nuclear power generation. Given the trend in coal shortage fuelled by inadequate rakes, coastal power plants may step up their imports, countering the downtrend in coal imports in the first half of this year. State-run power plants have almost imported two million tonnes of coal in 2017.

The supply constraint has become a sore point among industries dependent on domestic coal. Aside from thermal power stations being worst hit by coal crunch, Captive Power Plants (CPPs) owned by industries, including steel, cement, aluminium and paper, are in the soup.

Indian Captive Power Producers’ Association (ICCPA) has written to Coal India chairman, pointing to the severe coal shortage faced by CPPs that are at risk of closure. Against the stipulated 75 per cent coal mandated in the Annual Contracted Quantity (ACQ), the CPPs are getting 15-50 per cent coal.

Source: Business Standard