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Business News/ Industry / Energy/  Govt ramps up coal stocks at power facilities to 9 mt

Govt ramps up coal stocks at power facilities to 9 mt

Supplies of the fossil fuel are being further stepped up to reach 10 mt by Diwali, say officials

The government has been trying to replenish coal stocks at power projects which plunged to 7.23 million tonnes on 8 October.Premium
The government has been trying to replenish coal stocks at power projects which plunged to 7.23 million tonnes on 8 October.

NEW DELHI : Coal stocks at power plants have been ramped up to 9.02 million tonnes (mt) and are expected to reach stock levels to sustain up to six days of electricity generation by this month-end, two government officials aware of the matter said.

Supplies of the fossil fuel are being further enhanced to help coal stocks reach 10 million tonnes by Diwali, as reported by Mint on 19 October. This follows coal supplies to power plants across India being increased to 2.2mt per day, following a meeting between coal minister Pralhad Joshi, power and renewable energy minister Raj Kumar Singh and railways minister Ashwini Vaishnaw on 19 October.

The current levels of daily coal supplies will be met from domestic sources, including state-run Coal India Ltd, Singareni Collieries Co. Ltd and captive coal mines. Depleted coal stocks at power plants raised concerns about a potential power shortage. This considering coal-based power plants totalling 202.22 gigawatts (GW) make up more than half of the country’s power generation capacity.

India’s 135 coal-fired power projects totalling 165.066 GW had five days of stock as of Monday, according to the Central Electricity Authority (CEA). Of these, 119 coal projects totalling 129.86 GW had four days of stocks, while 16 plants located near coal mines totalling 35.2 GW capacity had stocks lasting six days. “We expect coal stocks to reach six days level by the month-end," one of the two officials said.

A spokesperson for the coal ministry declined to comment.

The government has been trying to replenish coal stocks at power projects which plunged to 7.23 mt on 8 October.

The current plan is to stock 300,000 tonnes of coal every day. Also, with lower electricity demand expected in November, the plan is to build up additional stocks of around 6 mt next month, increasing total fuel stocks to 16 mt by November-end.

Crisil Ratings said on Wednesday that a tenth of India’s coal-fired power projects is still vulnerable to outage despite the temporary easing of electricity demand.

“About 10% of the 209 GW (20 GW) capacity of coal-based thermal power generation companies (gencos) in India remains vulnerable to outage amid surging demand for coal. Despite the recent dip in demand (10% over October 16 and 17) due to heavy rains, shortage of coal persists with the inventory at five days for these power plants," the credit rating agency said.

This year’s coal shortage coincided with a sharp spike in electricity demand following the lifting of covid-related curbs, growth in electricity consumers and insufficient stocking by power projects before the monsoon season. Also, heavy rains in September impacted coal production and dispatches, while non-payments of coal dues also contributed towards the inadequate supplies.

India’s daily electricity consumption has crossed 4 billion units, causing an 18% jump in coal consumption during August and September, compared to the same period in 2019.

“To be sure, coal shortages have occurred in the past as well due to monsoon, lack of evacuation infrastructure, and rake unavailability. These have been partly addressed through higher imports, rationalization of mines, the ramp-up of production, creation and improvement of evacuation infrastructure, and liberalization of commercial mining norms. In fiscal 2020, India met 89% of coal required for thermal generation from domestic sources and balance from imports," Crisil Ratings said.


Global energy markets are in a frenzy with a spike in energy prices across fuel sources such as crude oil, gas and coal. 

“We expect high global coal prices to make imports dear and domestic e-auction premiums to remain elevated over the next few months, till supplies stabilize. In this milieu, 20 GW private capacities (out of 209 GW coal-based capacities) will be the most vulnerable as these depend heavily on the open market or imports for coal, and most have committed tariffs for the power sold to utilities," said Ankit Hakhu, director, Crisil Ratings, in the statement.  

While fuel supplies to power plants have improved, its impact is now being felt by other coal-fuelled industries such as aluminium that claim inadequate fossil fuel to fire their smelters for producing the non-ferrous metal.  

India’s aluminium industry has upped its pitch for the restoration of coal supplies, with lobby group Aluminium Association of India seeking principal secretary to the Prime Minister P.K. Mishra’s intervention for the same.  

India has the world’s fourth-largest reserves and is the second-largest producer of coal. While CIL’ annual production target is 660 mt for the current financial year, the coal off take is expected to be 740 mt. Around 39 mt of coal is available at CIL mines for transportation to power plants. According to the union coal ministry, India’s largest coal miner may be unable to meet its reduced annual production target of 660 mt.  

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Published: 27 Oct 2021, 10:29 PM IST
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