Non-power sectors cry foul over rake diversion to power units

With Piyush Goyal at the helm of both the coal and railway ministries, there is a diversion of rakes from other industries to meet the coal demand of the power sector. According to people close to the development, the preferential allotment by the Railways has badly affected sectors like cement, steel, and iron ore.

These non-power sectors are reeling under rake (train) shortage for a month and have approached the Ministry of Railways for a resolution. The steel industry has submitted to the Ministry of Railways that it is facing a shortage of around 50 per cent of the normal rake availability. “There is a dual dilemma. The rakes from the port carrying imported coal to our units and iron ore from mines to our plants have decreased significantly this month,” said a senior executive with one of the leading steel companies.

The iron ore sector has seen a diversion of around 20-30 rakes per day to Coal India (CIL) to supply coal to power units, said an executive. He said the number of rakes for the power units has increased to 250 a day, from the earlier 215.

The central government officials, however, said at least 15 rakes were diverted from cement, steel, and iron ore to the power sector in the last one month. “Railway Minister Piyush Goyal has directed to increase the number of rakes to the power sector by another 20, to avoid a power crisis during the ongoing festive season,” said an official.

“Some members have complained about the shortage of wagons for the cement sector. It has affected our operations somewhat,” said Shailendra Chouksey, president, Cement Manufacturers’ Association. The shortage is likely to hit the cement sector that has sunk more than Rs 60,000-crore investment in surplus capacity.

RAKE OVER COALS

Railways moved 216 rakes of coal every day in October 2017
Of this, 206 rakes had gone to the power sector

In September 2017, 210 rakes of coal were moved every day
Of this, 193 rakes were meant for the power sector

In April-October 2017 (till October 10), 214 rakes were loaded daily on average
This is 4% growth over the same period last year

A similar complaint has been made by the captive power producers (CPPs), which are categorised under the non-power category by the Ministry of Coal as they generate power for their use only.

“In the past six to eight months, the pendency of rakes has gone up to 900 for the CPPs. This has led to 30,000 megawatt of coal-based CPP running on less than half of the required coal capacity. Our current despatch volume stands at 30-40 million tonnes,” said Rajeev Agarwal, secretary, Indian Captive Power Producers Association.

A medium-size company, which has a CPP, said power units of most of them are on the verge of shutting down. “Lack of coal has pushed CPPs to purchase grid power, which is costlier than producing your own. The revenues of CPPs, especially those which are small- and mid-sized, have been impacted,” said an executive.

The coal ministry earlier this month said the precarious coal stock situation at power plants was because state governments did not heed the advisory sent to them for improving coal lifting and build up stock.

A major industry body with representation from all industry sectors also confirmed that its members are complaining about the shortage of rakes to cement, iron ore, and steel, despite having a higher demand from the sectors facing a rough time after demonetisation.

A recent press note of the coal ministry said as the demand for coal from the power sector increased, the supply of coal was increased, translating to 14.4 per cent improvement in coal supply in August 2017, compared to August 2016. Similarly, the coal supply to the power sector was 22 per cent more in September 2017, compared to September 2016. Till October 10, 2017, the supply has been 21.37 per cent more, compared to the same period in October 2016. The overall coal offtake of CIL in April-October 2017 is 8.3 per cent more, compared to the same period last year.

The coal shortage at power plants arose because production at many places in CIL was required to be regulated to avoid spontaneous combustion of coal stored in open, hot summer conditions. “At the same time, chief ministers, chief secretaries, chairman and managing directors of state and central generation companies were time and again requested to improve coal lifting and build up coal stocks,” said a recent press note from the coal ministry.