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Coal crisis: Industry associations from manufacturing sector appeal to PM

Prolonged coal shortage has had far-reaching effects on multiple industries, including the cement, steel, sponge-iron, aluminium, chemicals, rayon, textiles, and a large number of SMEs and their associated CPPs.Premium
Prolonged coal shortage has had far-reaching effects on multiple industries, including the cement, steel, sponge-iron, aluminium, chemicals, rayon, textiles, and a large number of SMEs and their associated CPPs.

  • Coal stocks at non-pithead thermal power plants remained consistently low during the last week till Thursday at 26% of normal levels. The Union government has diverted coal supplies from non-power sector to ensure availability for utilities and tackle power outages

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NEW DELHI: Battling coal shortages, manufacturing companies, MSMEs, and businesses reliant on captive power plants have appealed to Prime Minister Narendra Modi, seeking his intervention to ensure adequate supplies.

Ten industry associations, in a joint representation, pointed out that industrial and non-regulated companies have suffered due to curbs on coal supplies.

Since September 2021, several restrictions have been imposed, resulting in significant curtailment of the coal supply to non-power entities, the industry associations said. These included curbs on rake supplies from Coal India and its subsidiaries, longer intervals between coal auctions for industries, reduced quantities offered under exclusive and spot auctions, and supply of linkage coal as per trigger level instead of scheduled quantities.

The non-power sector received a brief respite in November 2021, but this was short-lived and supplies to NRS customers via rakes plunged once again, as preference of supplies was given to the power sector companies. Curbs were also placed on road supplies to the NRS sector, adding to their woes.

Surprisingly, these restrictions have been imposed despite Coal India achieving a record-breaking production of 622.6 million tonne in FY22. The prolonged shortage has had far-reaching effects on multiple industries, including the cement, steel, sponge-iron, aluminium, chemicals, rayon, textiles, and a large number of SMEs and their associated CPPs.

According to reports, coal stocks at non-pithead thermal power plants remained consistently low during the last week till Thursday at 26% of  normal levels.

The Union government has diverted coal supplies from non-power sector, and deferred some fuel auctions, to ensure coal availability for utilities and tackle widespread power outages across the country.

Recent shortages have forced industries to procure power from the exchange, stoking an unwarranted increase in demand and leading to an avoidable inflationary impact on economic stakeholders. This is also reducing the availability of power for domestic consumption as state discoms find it difficult to source large volumes at excessively high prices. This has especially affected smaller industries such as fertiliser manufacturers and tea producers, who are now struggling to survive. The tea industry in particular, despite being the fourth largest exporter globally, is paying double the normal rate of coal at 20,000 per tonne from the open market.

The companies are unable to rely on imported coal as an interim measure, since most of their boilers, kilns and furnaces are specially designed to run on indigenous coal supplies, leaving limited scope for imported coal as just 15-20% of the coal mix used in the production process. 

Aluminium Association of India, Coal Consumer Association of India, Confederation of Indian Textile Industry, Indian Captive Power Producers Association, Tea Association of India, Fertiliser Association of India were among the groups who wrote to the prime minister.

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