Centre to revise coal stock norms to avert future crisis

The Centre will redesign norms for coal supply and its storage at thermal power plants to avoid a demand-supply mismatch. The Ministries of Coal and Power have jointly decided to draft a monthly coal supply programme for thermal power units to keep a normative 40-million tonne (mt) stock, cumulatively, at power units by end-March.

The current stock at thermal power units stands at 7.3 mt, said executives. Coal India (CIL), however, has increased despatches and is aiming at supplying close to 3 mt by the end of this month, they added.

Since August, coal stock levels at thermal units have dwindled. Currently, 17 gigawatt (Gw) of power generation capacity has zero days of coal stock and 21 Gw has less than four days of coal.

Speaking to Business Standard, Alok Kumar, secretary, Ministry of Power, said they have consulted the Central Electricity Authority (CEA) of India to revise coal-stocking norms for thermal power plants and calculate on the basis of normative consumption of a power plant.

CEA, the technical arm of the Ministry of Power, collates the data on coal stock on the basis of stock left at the end of a power generation unit. Kumar said this leads to a disconnect since it can be considered less during high-demand periods and more during low-demand times.

“Our calculations say coal stock with thermal power plants should be 40 mt by the end of March, which is the beginning of high power consumption months followed by monsoon months when coal supply is lower,” said Kumar.

The stock calculation is done on the back of 85 per cent plant load factor of thermal units and their annual contract quantity of coal supply from CIL.

Kumar said they have shared the month-wise data with the Ministry of Coal on the quantum of coal to be despatched to power plants to build a 40-mt stockpile.

"The coal ministry has given us the assurance that the supply of coal will be adequate by the end of October," said Kumar.

The power sector’s current daily demand is 1.7 mt, of which 1.3 mt is met by CIL.

“Now that the rains have subsided in eastern and central India, it will help in raising the coal despatch. We will fully meet the increased power demand. In the next few days, coal stocks at thermal power plants will start building up,” A K Jain, secretary, Ministry of Coal, told this paper.

Jain added there is no shortage of coal at the mines and it was the extended monsoon that led to a mismatch. “It is only due to continued monsoons into late September and increased power demand that coal stocks at power plants have dropped to a low level. The situation has started improving with higher supplies than in September,” he clarified.

As several states defaulted on their payments during peak summer months, CIL regulated the coal supply to its thermal power units. This included high-demand states, such as Uttar Pradesh, Maharashtra, Tamil Nadu, and Rajasthan.

With a delayed and scattered monsoon, coal production was also impacted at CIL’s mines from July onwards. This led to a situation when close to 90 Gw of power generation capacity stared at a coal stock of less than eight days, during the last week of August.

At the same time, imported coal-based power plants reduced power generation since the cost of coal in the international market inched up. As imported coal prices increased by more than 40 per cent, imports to India were down to almost nil.

Officials said this power demand being met through close to 15 Gw of imported coal-based thermal power units also got loaded on domestic coal units and thereby on CIL’s supply.

To avoid a situation where payment defaults of a state lead to supply crisis, the power ministry is also devising a penalty for power generation companies (gencos)/states which do not pay CIL on time.

“We are also working on a penalty mechanism for states or gencos that do not pay for coal in time. There are regulatory mechanisms and we will enforce strict penalties for payment defaults to CIL,” added Kumar.

Power points 

• About 40 million tonnes of coal stock to remain at power units cumulatively by March-end 
• March marks the beginning of high power demand period 
• This is followed by monsoon months, during which coal supply is low 
• Annual contracted quantity of power plants, plant load factor to be taken into account while building the stock 
• Penalty on states/gencos not clearing dues in time