Unprecedented increase in demand of electricity due to revival of economy, heavy rains in coal-mining areas last month, increase in prices of imported coal and non-building of adequate coal stocks before the onset of monsoon are the main reasons behind depletion of coal stocks at power plants, a government source said.

There are also legacy issues of heavy dues of coal companies from certain States — Maharashtra, Rajasthan, Tamil Nadu, Uttar Pradesh, Rajasthan and Madhya Pradesh, he further added.

“A surge in revival of the economy after the second wave of Covid, led to an unprecedented rise in demand and consumption of electricity. The daily consumption of electricity has crossed beyond 4 billion units per day and 65-70 per cent demand is being met by coal fired power generation only, thereby increasing dependence on coal,” he stated.

Power consumption up

Meanwhile, as per the official, the power consumption for the period August-September has progressively increased from 106.6 BU per month in 2019 (normal non-Covid year) to 124.2 BU per month in 2021. During this period, the share of coal-based generation also increased from 61.91 per cent in 2019 to 66.35 per cent in 2021. Consequently, total coal consumption in August-September, 2021 has increased by 18 per cent in comparison to corresponding period in 2019.

Imported coal price of Indonesian coal jumped from $60/tonne in March to $200 in September/October of 5000 GAR (Gross as received) coal. The imports decreased in comparison to 2019-20 due to import substitution and rising prices. The reduction in imports is compensated by the domestic coal for power generation, hence increasing the demand for domestic coal further, the official added.

Depletion of coal stocks

So far in the last 10 years, maximum domestic coal supplied was 582 MT in FY2018-19 and with imported coal of 61.7 MT, total receipt was 643.7 MT leading to the highest consumption of 628.9 MT in any fiscal year. The Ministry of Coal (MoC) and Coal India Ltd were informed on April 8 about the requirement of 678 MT domestic coal and 45.3 MT of imported coal in FY22 with total coal requirements of 723.3 MT, the official said.

“The unprecedented increase in coal-based power coupled with supply shortage during monsoon and less stock build up in April-June has led to the depletion of coal stocks in power plants which was 13 days (23.97 MT) as on August 1, 2021 and now 4 days (8.08 MT) as on October 1. Of the 135 power plants monitored on a daily basis, 72 plants have coal stocks of less than 3 days, 50 plants have stocks from 4 to 10 days and 13 plants have stock of more than 10 days,” he further added.

Ministerial group

An inter-Ministerial sub-group led by the Ministry of Coal has been monitoring the coal stock situation twice a week. In order to manage the coal stock and ensure equitable distribution of coal, the Ministry constituted a Core Management Team (CMT) on August 27 comprising representatives from MOP, CEA, POSOCO, Railways and Coal India Limited (CIL) to ensure daily monitoring.

The CMT is closely monitoring and managing the coal stocks on a daily basis and ensuring follow up actions with CIL, Railways to improve the coal supply to power plants.

In the last week of August, plant outages on account of coal shortage were reported for a capacity of about 13,000 MW which led to increase in power exchange prices up ₹20/kWh. After intervention of CMT, now the outage has come down to 6,960 MW and power exchange prices are at about ₹7 per kWh. The coal dispatch needs to be increased in order to exceed daily consumption for building up the coal stocks as the power demand is expected to stay at the present levels.

As coal consumption by thermal power plants is likely to exceed 700 MT in FY22, a comprehensive strategy has been prepared by Ministries of Coal, Power and Railways to remove logistic bottlenecks in order to sustain high demand and consumption of coal by power plants.

Meanwhile, as per sources, the Power Ministry has advised the Central Electricity Authority (CEA) to specify the mandatory coal stocks to be maintained by power plants both at pit-head and non-pit heads. There would be a provision of disincentives for those plants who do not maintain their mandatory coal stocks and they would be kept in lower order of priority for coal dispatch. Those gencos who do not clear dues of coal companies, may be kept at the lowest order of priority for coal dispatch. In fact grading of gencos would be carried out based on coal stocks maintained by them as well as regular payments to coal companies. Those gencos higher in the grading would be given priority in coal allocation and dispatch.

Moreover, in consultation with the Coal Ministry, coal supply would not be restricted to the annual contracted quantity (ACQ) of power plants but plants would be given coal as per their actual requirements. Those plants coming higher in Merit Order Despatch (MoD) as per Security Constrained Economic Despatch (SCED) would get more coal, the sources added.