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Coal shortage begins to bite

Coal shortage begins to bite
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First Published: Tue, Sep 20 2011. 10 34 PM IST

Updated: Tue, Sep 20 2011. 10 34 PM IST
The lights are dimming in thermal power plants across the country. Lack of coal supply, accentuated by problems of low-grade coal and transport issues, is beginning to bite.
The shortfall against targeted electricity production is worsening by the month as the accompanying table shows.
In August, total thermal-fuel based power generation grew 3.28% from a year ago, the worst so far this fiscal year. But this was well short of the targeted increase in power generation for the month. This category of power plants accounts for nearly four-fifths of the country’s power production.
Within this division, coal-based plants generate the lion’s share. They are mainly responsible for the decline. Coal-based power production in August fell short of the target by 4.71%. Even the increase from the year-ago period was the worst this fiscal at 4.88%.
At the end of August, 22 power plants across the country had a supply of less than seven days of coal. For many of these plants, one of the major reasons for the fuel shortage was transport problems. Simply put, not only is there not enough coal to begin with, whatever is being produced is not able to make its way to the power plants on time.
As a result, capacity utilization for coal-powered generators at the end of August was hovering around 66%, down nearly 2 percentage points from a year ago. What’s more, this is significantly down compared with the 79.4% plant load factor for coal-powered generators in April.
Also See | Power Cut (PDF)
In other words, it is becoming more and more difficult to tie up fuel supply for the nearly 5,000 megawatts of coal-based capacity that has been added since the beginning of this fiscal.
What has bailed out the electricity sector so far is the stupendous growth in hydro-powered capacity, which has been chugging along at 20%-plus rates in the past three months. But with the monsoon coming to an end, and the slower rate of capacity addition in this sector, that may not last.
Power companies are buying coal mines abroad such as GVK Power and Infrastructure Ltd’s recent acquisition of Hancock Coal Pty Ltd. But that coal is going to take some time to find its way to local power plants. And we are talking only about the power generation and revenues.
Starting this month, coal imports from Indonesia will cost more. The damage it will do to profitability will become clear only in the coming months.
Graphic by Yogesh Kumar/Mint
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First Published: Tue, Sep 20 2011. 10 34 PM IST