Coal crunch roils captive power plants after MCL's output declines steeply

Mahanadi Coalfield's output plummeted 33 per cent in September, engendering huge shortage for CPP-based industries

Captive Power Plants (CPPs) in Odisha are in the throes of a severe coal crunch as production from the second largest subsidiary of Coal India Ltd (CIL),  Mahanadi Coalfields Ltd (MCL), has declined steeply for the months of September and October.

MCL's coal output plummeted 33 per cent in September, engendering huge shortage for CPP-based industries and other power plants in Odisha. CIL's output from all its subsidiaries tumbled 23 per cent in September and 21 per cent in October when compared with the corresponding months of 2018. Between April and October of this financial year, CIL's total coal production fell 8.5 per cent.

On an average, CPP-based industries are getting less than 50 per cent of the coal against secured linkages and annual contracted quantity .

Though MCL has set a production target of 160 million tonnes (mt) in FY20, it is still grappling with production shortages stemming from intermittent shutdown of mines. CPPs have to bear most of the brunt, as alleged preferential treatment is meted out to independent power producers. With a total coal-based thermal capacity of 15,769 Mw, Odisha requires 71 million tonnes per annum (mtpa), which is only 45 per cent of the total production capacity of MCL, but state-based industries continue to reel under coal deficit.

Appalled at the dwindling coal supplies, Coal Consumers' Association of India has written to MCL to restore normal supplies of coal as per the monthly scheduled quantum (MSQ).

“Consumers expected the desired relief by getting full MSQ in December 2019. But to their utter surprise and dismay, MCL has again taken the decision of supplying monthly quantity at trigger level for December 2019. This is an unexpected burden on consumers as sourcing coal from open market is adversely impacting the industries making it difficult for them to sustain in the competitive market," read the letter from CCAI to MCL chairman & managing director.