Metal companies still face coal, rake shortage

Suresh P. Iyengar | | Updated on: Dec 14, 2021

With the crisis hitting its peak during September-October, the government witnessed full support of the NRS consumers for diverting the maximum quantity of coal to the power sector (Representative file photo) | Photo Credit: Udit Kulshrestha

The Federation of Indian Mineral Industries has sought the Prime Minister Office’s intervention

With no respite in sight to the continued shortage of coal faced by the non-regulated sector (NRS), the Federation of Indian Mineral Industries (FIMI) has sought the Prime Minister Office’s intervention to resume normal coal supplies by Coal India and availability of railway rakes by the Railway Board.

FIMI, in a letter dated December 9, said a coal crisis in the country still prevails and continues to affect the business continuity of NRS such as aluminium, steel, cement, and other metal industries which are heavily dependent on domestic coal.

The second quarter of the current financial year saw the coal crises unfold due to increased power demand, high import coal prices, and lower domestic coal production. Most of the coal meant for NRS was diverted to the power sector. This decision of Coal India has led the NRS consumers to resort to coal and power imports from grids to regulate their production, said the letter.

With the crisis hitting its peak during September-October, the government witnessed full support of the NRS consumers for diverting the maximum quantity of coal to the power sector. Since then, the situation for the power sector has improved to current levels of 10 days stock availability, while on the other hand, the NRS consumers are struggling to get uninterrupted coal supplies and rakes for continued operations, ultimately leading to a coal crunch, it said.

Coal India’s letter to Indian Railways

In a separate letter to Indian Railways dated December 2, Coal India had advised Indian Railways to enhance the rake supplies exclusively for the power sector to 296 rakes per day, compared to a combined 272 rakes per day for both power and non-power sector in November.

Such a step, if taken, will put the consumers of NRS in a precarious situation depriving them from getting sufficient 50 coal rakes per day even for its sustained operations. With the revival of the economy and post-pandemic industrial activity, the non-power sector is highly dependent on uninterrupted coal supplies which is vital for power-intensive industries.

Any production curtailment by this sector could have a cascading effect on consumption and downstream supply chain. It could also create inflationary pressure in the domestic market besides making the products non-competitive in the global markets, it said.

Published on December 14, 2021
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