Coal shortage crisis in power generation, non-power sector escalates again

A complex coal demand-supply mismatch is emerging in the country with both power generation and the non-power sector (manufacturing units) claiming that the supply is below optimum levels. They also allege that national miner Coal India Ltd (CIL) is supplying bad quality coal. 

 At the national level, the current stock of coal at power generation units stands at an average of 9.8 days (38 per cent of the normative 24 days stock), according to data available on the National Power Portal. The critical stock threshold is 7 days or less.

The ministry of coal has, however, called this a seasonal phenomenon and has blamed the Indian Railways for the drop in supply.

The situation is far more precarious for power units situated away from the mines, but close to high consumption states in the north, west and south of the country. Industrial states such as Maharashtra, Gujarat, Andhra Pradesh and Karnataka are the worst-hit, for their state-owned units have an average of only 4 days’ coal stock.

However, coal ministry officials have rubbished the charges of the supply of low-quality coal, claiming that this is a seasonal phenomenon. “Every year during these months the coal stock usually has higher overburden coal,” said a senior official. 

The ministry cited the domestic coal supply to the power sector till January 2022, which was 552.65 million tonne. “This is 26.56 per cent higher than last year and 18.7 per cent higher over the same period in 2019-20,” the official said. 

Meanwhile, independent power producers (IPPs) are crying foul over the low supply of coal. Sources said that in the weekly inter-ministerial meetings hosted by the ministry of coal for resolving coal demand-supply mismatch, the private units have been complaining since November that they are not getting enough coal. 

Currently, the national average coal stock at NTPC units is 13 days and at IPPs, it is 9 days.

At the same time, both the state and the private power units are reporting major grade slippage in their coal stocks. Senior executives alleged that to meet the enhanced demand, coal is being mixed with “overburden dump” (boulders, stones and muck).

 “Against the contracted capacity for the G11 grade (4000-4300 kcal caloric value), we are getting G-14 or G-15 (3000-4000 kcal). This has been happening for over a month now,” said an executive at a private power unit.

Industry executives said that low-grade coal leads to losses for the power unit as they have to burn more coal. And this exacerbates the issue of rail rake shortage. There is already a deficit in rake allocation to the power units, especially the non-pithead mines that are located far from the mines.

“The deterioration in the calorific value of coal increases pressure on the Railways to supply more coal. The non-pithead plants are being allocated less rakes by the Railways as the turnaround time for the wagon is higher. That’s why there is a wide gap in the stocks at pithead and non-pithead power units,” said an executive.

On the other hand, CIL in a recent statement said coal dispatch has increased by 23 per cent during April-January period, over last year. It said company managed to liquidate its coal inventory by nearly 64 million tonne during the 10 months of FY’22. CIL began the fiscal year saddled with a stockpile of 99 million tonne of coal.  

CIL had last year urged the power units to stock up on their coal. Later that year, over August-October, most power plants had reported a severe shortage of coal and critical stock levels. 

Subsequently, the Centre issued a diktat, saying that coal supply to the power units should be prioritised. This led to limited or even no-supply to the non-regulated sectors (NRS), which are still claiming to be reeling under a shortage of coal.

The Aluminium Association of India, in its recent letter to the ministry of coal, said that since August 2021, the NRS are being supplied with only 40-50 per cent of their coal requirement. 

Similarly, the Indian Paper Manufacturers Association has stated that operations at paper mills across the country have been severely hampered owing to the lower allocation of coal by CIL and the fact that there aren't enough railway rakes for its transportation. 

Coal ministry officials, however, said that these complaints are without any merit. “CIL is not hoarding coal. It is actually profitable for CIL to sell coal to the NRS, but the priority is the power sector. We have been auctioning coal for five years. Why aren’t these industries taking mines? Or buying coal in the marketplace (e-auction of coal). Supply to the NRS is higher than last year. But the enhanced coal mining and supply this year has gone to the power sector, which is why they are sore,” said a senior official who did not wish to be named.