Coal India asks states to specify their power demand for next 3 yrs

18 December 2017

In an effort to avert the coal scarcity that dogged thermal power plants this year, Coal India has asked states to indicate their revised power demand for the next three years, on the basis of which it will allocate the fuel. The company has threatened to stop supplies to states that do not cooperate in this exercise.

Coal India has requested the Central Electricity Authority to assess coal requirement of state utilities on the basis of power demand and plans to ask private firms and state-run companies like NTPC to share their revised coal requirement in the next three years. It would be applicable for companies that have supply agreement with the coal producer.

“Companies that do not share their coal requirement will receive no coal similar to state utilities. Those that under-report their requirement will receive in proportion to their estimates,” a senior Coal India executive told ET.

The exercise, being undertaken for the first time, will help the world’s largest coal producer to assess its production requirement and will enable it to plan ahead.

India’s thermal power capacity of 137 GW requires about 1.43 million tonnes of coal daily. Bulk of this is sent on the railways. Power plants are required to stock 21 days of coal but they currently have enough for only eight days. “Coal India has a target to produce one billion tonnes by 2020. Assessment of demand for the next three years will also help us understand how best we can plan production and supply logistics,” the executive said.

According to targets set by the government, the monopoly needs to produce 660 million tonnes this year, in 2018-19 it needs to produce 773 million tonnes followed by 908 million tonnes in 2019-2020.

During April and May this year, demand for power from the thermal sector dipped. During the same time, power companies were saddled with several days of coal stocks. In an effort to reduce their inventory they reduced buying. Later, during June, demand for thermal power started to rise and these companies started asking for the quantum they did not lift earlier.

Despite having adequate stocks at pit heads, Coal India could not send the quantities they asked for because the Indian Railways, which transports bulk of the coal, faced logistic constraints.

This snow balled into a situation when coal stocks at power plants dwindled to six days and many units had to be shut.

“We want power companies to maintain their stipulated inventory position even if demand dips. According to Central Electricity Authority’s stipulation, coal stock for 20-30 days has to be maintained by non-pithead plants, which for pit head plants is 15 days. Pre assessment of demand for the next three years will also help Indian Railways plan logistics accordingly,” a coal sector executive said.

Source: ET