Coal stocks at power plants down 35%, govt steps up efforts to raise supply

Delays in commissioning of new mines and a historic dip in production from operational mines have thrown coal availability position and the associated power capacity into emergency mode. Fresh data from the Central Electricity Authority, the apex power sector planning body, reveals the current fuel stock at India’s 89 thermal power stations is down by 35 per cent from a year earlier.

The power stations are running on an 8.3-million tonne (mt) coal stock, against 12.7 mt in the same period last year. In addition, 26 power stations have supercritical stocks, or stocks that can support operations for four days, up from 14 stations. Also, half of the 89 stations have stocks sufficient to sustain operations for seven days. A senior coal ministry official said, “The main reasons for the decreased availability of coal recently are logistical problems of railway rakes and the hit to production from strike at Coal India Ltd (CIL) and heavy rains.” He said the ministry had taken several steps, including cancellation of captive blocks and taking up the rake availability issue with the Railways.

The ministry has awarded 193 captive coal blocks, largely to private sector companies, over the past 18 years. However, only 28 have started operations, throwing production targets off the track. These blocks were expected to produce 104 mt coal a year by the end of this Plan period. But last year, production stood at a dismal 34 mt. The ministry, therefore, has cancelled allocations of a dozen blocks, including five blocks of state-run NTPC Ltd. “We are also trying to ensure that CIL’s Mozambique block starts producing beginning next year. The ministry is also scouting for assets in Australia and Indonesia. Also, new technologies for ramping up underground production are being sought from Australia,” he said. CIL, the state-owned coal monopoly, has established an arm, Coal India Africana, to commence production from two exploratory blocks it owns in Mozambique. Its efforts to acquire overseas assets had failed last financial year.

The power ministry is also worried over the widening gap between the power capacity linked to CIL supply and actual receipts from the coal producer (see table). CIL’s production remained flat at 431 mt last year. During this year, too, it has been reporting declines in production for the first time in recent history. The power ministry has urged CIL to meet its supply commitments in the absence of which over 24,000 mw new power capacity is likely to be stranded. “Inadequate availability of domestic coal and reluctance of coal companies to sign fuel supply agreements have serious repercussions on the confidence of utilities, developers and investors,” the ministry stated in a recent note.

CIL’s latest announcement to cut its production target for this year to 440 mt has added fuel to the fire. The power sector requires 381 mt coal this year. CIL has brought down its supply target to the power sector to 343 mt, from 382 mt set earlier, leaving a gap of 75 mt to be imported.