23-08-2017

India: Coal shortage back to haunt power plants

Coal

The spectre of running out of coal has returned to haunt power plants across the country after a gap of nearly three years due to a combination of several factors, forcing some private power plants to shut their units or pare operations while state units manage to chug along on priority supplies.

Coal shortage at power stations had become a thing of the past on the back of a slew of co-ordinated measures taken by the Narendra Modi government. But this year suddenly the situation has taken a turn due to closure of a railway line amid Coal India Ltd’s move to pare pithead stocks by pulling back production and excessive rains in Central Coalfields Ltd (CCL) area – last seen in 1960 – affecting production.

According to Central Electricity Authority (CEA) data, two plants had no fuel, five were operating with only a day’s stock, eight with two days’ stock, and 13 with three days as of August 15. Several more had 4-5 days stock.

Ironically, the genesis of the problem may be found in the improved supply situation. As TOI had first reported, power stations across the country drew down their coal stockpiles by 50% to reduce inventory costs as days of uncertainty became a thing of the past.

Total coal stockpile at plants had reached 39 million tonne at the beginning of 2016-17, with several plants showing coal stock for 50-60 days and average stock exceeding 25 days. The average has dropped to 11 days now.

“Plants reduced coal stocks to cut inventory costs. This led to pithead stock at Coal India piling up, prompting the company to prune production. Then the Dhanbad-Chandrapura railway line was closed due to concerns over caving in and supply quotas were shifted to CCL. Around the same time, demand increased with rising temperature and humidity. The unprecedented rains in CCL areas added to the problem,” power and coal minister Piyush Goyal told TOI.

Private power producers said after the line’s closure, 8-10 rakes of daily supplies were shifted from BCCL to CCL, which saw a 20% shortfall in production during the April-July period. With instructions from the government to give priority to state-run generation utility NTPC, CCL pruned supplies to private power producers.

They said when ACQ (annual contract quantity) under FSAs (fuel supply agreements) is not sufficient to meet total requirement, regulating it further will only add to their woes. Currently, CIL’s commitment is generally at 75% of ACQ and further supply cut will hit them hard financially if they are forced to import costlier coal.

Source: TNN

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