'Russia-Ukraine crisis to further hamper coal supply to CPPs, industries'

According to the Indian Captive Power Producers Association, amid rising energy prices globally, electricity producers will pressurise the government for more domestic coal to fulfill their demand

The Russia-Ukraine military conflict, which has increased energy prices globally, will reduce the propensity to import coal by power plants and will further hamper the supply of fuel to captive power plants and industries like steel, aluminium from state-owned Coal India, ICPPA said on Friday.

According to the Indian Captive Power Producers Association (ICPPA), amid rising energy prices globally, electricity producers will pressurise the government for more domestic coal to fulfill their demand and this will adversely affect fuel supply to the non-power sector.

"This (Russia-Ukraine) crisis has increased energy prices globally and that reduces the propensity to import coal and coke. And it will further complicate the matter and it is going to hamper supplies to both CPPs and industries from Coal India," ICPPA Secretary General Rajiv Agarwal told PTI.

The industries like aluminum, cement, steel, sponge-iron, paper, fertiliser, chemical, rayon and their captive power plants (CPPs) are mostly dependent on domestic coal.

"From the last six-seven months we (CPPs) have been getting a very low supply of coal. Because of this crisis power plants... will have lower propensity to import and hence they will pressurise the system to give more and more coal to them by rail mode. That will stop or delay operationalisation of normalcy in rake supply to CPPs and industries," Agarwal said.

The yearly supply of coal to the non-power sector is just eight per cent and still the non-regulated sector (NRS) is facing fuel shortages.

This adverse supply situation that started around August/September last year became further arduous as coal stock at many plants plunged below critical level.

The demand-supply ratio had shown signs of improvement during November. However, the supply to the NRS consumers, including CPPs, has plummeted once again despite October-March being the highest production months for Coal India Ltd.

According to Chhattisgarh Sponge Iron Manufacturers Association President Anil Nachrani the non-power sector is already reeling under fuel shortages and the Russia-Ukraine crisis has worsened the situation.

Energy-intensive and continuous process plants along with their captive power plants are highly dependent on coal as a primary source of fuel. Therefore, interruption in the fuel supply chain is forcing many plants to run at a lower capacity and adversely affecting their cost of production.

Higher cost of production will ultimately affect every section of the society, industry associations had recently said in joint representation.

On Thursday, Russia launched military operations against Ukraine. Meanwhile, European Union leaders are putting on a united front and agreed on a second package of economic and financial sanctions on Russia.