CIL strike impact: Power outages likely in North and East as stations face coal crunch

Fuel availability at 42 coal-based plants, with combined capacity of 46,610 Mw, is at a critical level

A five-day strike announced by Coal India Ltd (CIL) worker unions is likely to hit the power sector. The northern and eastern parts of India could face power outages, owing to a shortage of coal in generating stations supplying power to these areas.

The government’s efforts on Tuesday failed to convince CIL unions not to go on strike. The unions sought reversal of a decision on commercial mining and divestment of stake in CIL, which the coal ministry didn’t agree to. “Now, it’s between the government and the labourers of CIL, who will not work for five days, due to mining in the country going into private hands,” said a union leader.

Tuesday’s meeting was chaired by Anil Swarup, secretary in the ministry. He said the Coal Ordinance (Special Provisions) Bill, 2014, which allowed commercial mining, wouldn’t lead to de-nationalisation of the sector. Union leaders said coal minister Piyush Goyal wasn’t present at the meeting.

If the workers go on strike, CIL is likely to lose Rs 200 crore a day.

Fuel availability at 42 coal-based plants in India, with combined capacity of 46,610 Mw, is at a critical level — these have less than seven days’ supply of coal. Of these, 20 are at a super-critical level (less than four days’ coal supply). The strike could hit hard, as most NTPC power plants run on blended fuel, with 8-10 per cent of imported coal. Executives said the ratio of imported coal in the optimum fuel blend increased during crises. This escalates the cost of power.

“If the strike continues beyond two days, the supply shortfall of domestic coal will lead to spot power prices rising 20-25 per cent. Utilities in north and east India will see the greatest impact,” said a power market executive.

As of Tuesday, the average market-clearing price of power stood at Rs 2.59 a unit.

Power stations with captive mines might look at this as an opportunity to sell merchant power at higher rates.

Given state utilities in north and east India are strapped for cash and not in a position to buy expensive power, there could be power outages in these parts.

Currently, the peak power deficit in the northern region stands at 2,370 Mw; in the South, it is 2,147 Mw.

Central Electricity Authority executives said a contingency plan would have to be made if the CIL workers’ strike stretched beyond two days.

The authority can direct power generated from gas-fired generation plants, as well as merchant power from captive mines to areas facing a power crunch.

Though rakes from coal mines were loaded to supply coal to power plants on Tuesday, major generating stations seemed unsure.

Indian Railways executives said they would have to stop services in areas where loading from coal mines was cancelled.