Power plants ‘critical’ amid coal crunch

3-Sept-2018

Coal shortage across the country has once again resurfaced with equal severity, a sort of rerun of the crisis situation that was earlier seen in April.

Coal stocks available with thermal power plants is down significantly in the western and the northern region as the facilities are trying hard to maintain reserves of fuel in the wake of rising demand for power during the summer months.

Despite adequate supplies from Coal India, rising generation and lack of availability of railway wagons, the dominant mode for transporting coal to power plants, have triggered this crisis, industry insiders say.

To tide over the crisis, availability of wagons were being rationed with priority given officially to power sector at the expense of other critical coal consuming industries like cement and aluminium.

This policy, which is expected to continue in the coming days, have hurt these sectors till now and would remain a pain point for the core industries.

State-wise, power supply situation in Maharashtra could turn grim with six power plants in the state among 14 assessed are running with critically low coal stocks.

Out of 117 power plants across the country that have coal linkage pacts with Coal India, 11 are in critical or supercritical condition, meaning they have coal stocks for less than six days against the ideal situation of 21 day’s stocks, as per the data as on Wednesday compiled by the Central Electricity Authority.

Once they run out of stocks, the plants will be forced to shut down.

Of these 11 plants with low stocks, six are in Maharashtra alone while three are in Chattisgarh, taking the total for the Western region, which also includes Gujarat and MP, to nine.

Besides these, rest of the country has only two plants with stocks at a critical level, Yamuna Nagar plant at Haryana and N Tata Rao unit at Andhra Pradesh.

This, however, doesn’t mean that rest of the country beyond the western region are adequately stocked.

“The stock with all the power plants across the country having linkages is now at 14.83 million tonne of which 5.14 million tonne is with western plants. Both these figures translate to 10 days stock,” an official with Coal India said.

The situation is relatively better in the north where there is roughly 12 days of stock left.

Supplies by Coal India to the power sector, however, have grown 15% during April-July period to 161.7 million tonne from 140.6 million tonne a year ago period.

However, a part of this supply is considered as deemed supplies meaning coal mined for a specific power plant would be considered as supplied even if that particular customer fails to pick up its entitlement.

Demand for thermal power has kept pace with supplies by Coal India, triggering the crisis, the Coal India official said.

Thermal power generation during April-July period has grown to 358.75 billion units from 340.29 billion units a year ago.

To tide over the crisis, the power sector is now resorting to imports which implies outflow of foreign exchange at a time when rupee has hit a record low against the dollar.

Higher demand for power may lead to 62 million tonne of coal imports this fiscal, up from 56 million tonne in FY18, India Ratings has said.

“With the demand for power likely to remain healthy in the rest of FY19 and thermal capacity contributing to the required growth, coal availability becomes a key determinant. Considering the historical growth rate of domestic non-coking coal production and offtake, imported coal requirement will increase, as against FY18 when imported coal usage declined,” the rating agency said on Thursday.

Maharashtra State Power Generation Co or Mahagenco has just invited bids for the import of 2 million tonne of coal for its plants at Koradi, Chandrapur and Bhusawal.

In a bid to solve the supply crunch earlier seen in April, railways and coal ministries decided to divert most of the available rail wagons to power plants triggering adverse ripple effect on sectors like cement and aluminium.

“Adhoc orders for stopping the secured coal rakes for captive power plants, especially from Mahanadi Coalfields and South Eastern Coalfields (subsidiaries of Coal India) for diversion to power plants has resulted in coal crunch situation for aluminium sector. Just orders should be stopped immediately,” Aluminium Association of India, which has raised the issue with the Prime Minister’s Office, has said in a note available with DNA Money.

“Aluminium industry is highly power-intensive entirely based on uninterrupted power from CPPs for meeting power requirement. State discoms cannot supply such high power requirement. A recent Niti Aayog report on Need for an Aluminium Policy in India explicitly states that availability and allocation of rakes to the non-regulated sector is well below the demand and poor rake availability affects coal and bauxite movement and results in high working capital blockage,” the recent note given to the government by the body said.

The cement sector is facing similar problems.

“Non-availability of railway rakes constrained the movement of both raw materials as well as finished products. Rakes had been diverted to meet the requirement of power plants for carrying coal. This disrupted not only supply of coal to the clinker plants of the company but also transportation of clinker to the grinding units and cement to rail-fed destinations,” cement maker Birla Corp said.

Ambuja Cement’s freight cost was higher partly due to a shortage of adequate availability of rakes in the east, said IndiaInfoline’s research report while brokerage house Prabhudas Liladhar commented that lower availability of rakes affected clinker volumes of JK Lakshmi Cement.

Source: DNA