While coal stocks are available at mines, it is deleting at power plants, thus raising fears about potential electricity crisis across the country.
According to a senior official at Coal India Ltd (CIL), the coal stock position at thermal power plants may be critical but not alarming, and the company is accelerating production and supplies to avoid any possible disruption. CIL has ramped up production by nearly 27 per cent to 26.4 million tonne (mt) during the first half of April. It has raised its supplies to thermal power stations by over 14 per cent during the first half of April this year, compared to same period last year. CIL’s supplies have hit 1.64 million tonnes (mt) per day during this period, against 1.43 mt of similar period during April 2021.
“We are hopeful of clocking a record production of around 55 mt in April this year, almost 8-10 mt higher than the pre-pandemic period of April 2019, when we registered a production of around 45 mt,” the official told BusinessLine.
To tide over the intense demand, CIL has made available additional 8.75 mt of coal to State and Central gencos for lifting through rail-cum-road mode till May 31. Of this, 3.25 mt is the unlifted quantity of the earlier round of RCR offer, and 5.5 mt is the new offer.
Despite higher production, escalating power demand, which is driven by the post pandemic economic buoyancy and hotter-than-normal summer, seem to dwarf the upsurge in supplies. This apart, some of the imported coal-based power plants, have curtailed imports due to soaring international prices, thereby exerting pressure on domestic power plants and leading to low coal stocks, sources said. While the imported coal-based power plants were dipping into domestic fuel supply, the other reason for possible power crisis could be because even gas-based plants were cutting down output because of steep fuel costs.
In fact, the Union Power Ministry had recently issued a circular urging the States to take action against imported coal-based power plants not maintaining coal stocks and not supplying power, according to the contract, at the pretext of high imported coal prices. The Ministry had also asked States and private companies to import around 36 mt of coal for blending purposes. If this was not enough adding woes were the surge in demand on the back of post pandemic recovery and summer season.
According to Ritabrata Ghosh, Assistant Vice-President, ICRA, since international coal prices are elevated, people are trying to replace it with domestic coal to the extent possible. Landed price of imported coal, per GCV, is almost two-three times higher as compared to domestic coal.
“Price of imported coal from South Africa went as high as $442 a tonne as on March 9 this year, thereafter it started declining and came down to $221 a tonne by March 21. But since then it has again started increasing and is currently ruling at around $306 a tonne,” said Ghosh.
Surge in demand
The mercury levels soared above 41 degrees centigrade in Delhi, Punjab, Haryana, Uttar Pradesh and Rajasthan. The Ministry of Earth Sciences has categorised heatwave status in these northern states. Maximum departure from normal temperature is ranging from 4.8 degrees to 6.2 degrees, CIL said.
The country’s total power generation was 9.5 per cent higher, at an average of 4.53 Billion Units (BU), till April 15 this year over same period last year. Coal fired power generation climbed to an average of 3.5 BU per day in April 2022 fortnight, 9.4 per cent more same period last year. Though the uptick of 300 million units generation per day includes imported coal as well, the bulk of it was fuelled by CIL’s supplies.
The pressure on domestic supply could ease if the imported coal based power plants meet their requisite imports set for the year.
Adani Group’s power arm, Adani Power Ltd, which operates a thermal power plant at Mundra in Kutch with installed capacity of 4620 MW, uses a mix of imported and domestic coal. According to company sources, the plant mostly uses imported coal for its fuel requirements, while it also has an operational Fuel Supply Agreement of 6.405 MTPA with subsidiaries of Coal India.
There was no clarity on the quantum of imported coal currently being used for the power generation.
On the cost front, earlier this year, the Supreme Court had approved a settlement between State discom, Gujarat Urja Vikas Nigam Limited and Adani Power, allowing the latter 100 per cent pass-through of the difference in coal cost as per the benchmark set by the Central Electricity Regulatory Commission. A new Power Purchase Agreement (PPA) between the two with provisions of the revised cost structure has been inked, sources informed.
While producers are working out ways to maintian sufficient supply, another challenge is logistics. FIngers are also being pointed at the Railways for not increasing the number of racks.
(With inputs from Rutam Vora/Ahmedabad, Richa Mishra/Hyderabad)