Policy

Centre asks states to take immediate steps for building coal stocks

BL New Delhi Bureau | | Updated on: May 18, 2022

Govt will reduce domestic supplies by 5 per cent for gencos who do not start blending with imported coal by June 15

As coal reserves at domestic power plants dips to seven and a half days, the Centre on Wednesday said it has asked states to take immediate steps towards importing the crucial commodity for blending. The Centre also expressed concerns over the delay in import tendering process by Uttar Pradesh, Karnataka and West Bengal.

The Power Ministry also directed all gencos to import 10 per cent coal for blending by May-end. If blending is not started by June 15, domestic allocation of defaulting thermal power plants (TPPs) will be reduced by 5 per cent.

The Power Ministry has also issued directions to gencos — including independent power producers (IPPs) — that if the orders for import of coal are not placed by gencos by May 31 and if the imported coal for blending purpose do not start arriving by June 15, all defaulter gencos would have to import coal for blending purpose to the extent of 15 per cent (in order to meet shortfall of imported coal for blending purpose in Q1 — April-June 2022 — up to October 31, 2022.

Blending with imported coal

“The Minister of Power RK Singh has written to states that gencos may be asked to take immediate steps to import coal for blending in order to meet their requirement during Monsoon season. The Minister — in separate letters to Haryana, Uttar Pradesh, Karnataka and West Bengal — has expressed concern that the tender process for coal import has either not started or not been completed in these states,” Power Ministry said in a statement.

The Ministry had earlier advised state gencos to import 10 per cent of coal requirement for blending purposes. States were advised to place orders by May 31 such that delivery of 50 per cent quantity is ensured by June, 40 per cent by August and remaining 10 per cent by October this year, it said.

“It has further said that not much blending has taken place in the months of April and May. Power plants (who have not yet started blending imported coal) will ensure that they blend coal at the rate of 15 per cent up to October 2022 and thereafter at the rate of 10 per cent from November 2022 to March 2023,” it added.

Shortfall likely

The ministry, in a letter to State Secretaries, Principal Secretaries and gencos, said that keeping in view the likely shortfall of coal supply from domestic sources as compared with the requirement to meet power demand, domestic coal will be allocated proportionately to all gencos based on likely availability from June 1 and the balance requirement will need to be met from imported coal for blending purpose and target set for production in captive coal mines.

“All gencos have been advised to ensure adequate stocks at their power plants for smooth operation until October 2022,” Singh cautioned states in the letter.

Lower imports

The ministry directed that imported coal-based (ICB) plants should run and the State should import coal for blending, as in the previous years. It has already issued directions under Section 11 of the Electricity Act on the same.

“However, the import by states of coal for blending is not satisfactory. In FY19, 21.4 million tonnes (mt) of coal was imported for blending. In FY20, the total import for blending was 23.8 mt, whereas in FY22, it was only 8.3 mt. This is the cause of the stress in the availability of coal,” the ministry said.

Rail-cum-Road mode

The Minister has also said that state gencos may lift the entire quantity of coal offered under RCR mode expeditiously to build coal stock. He stressed that in case of failure on either account, it would not be possible to give additional domestic coal to make up the shortfall.

If RCR allocation is not lifted, it will be allocated to other needy state gencos and if the present state of affairs continues, it may lead to shortage of coal in states during monsoon, adversely affecting the power supply situation in the States, Singh added.

Published on May 18, 2022
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