A below-normal South-West monsoon is likely to impact fuel demand and power supply. The Ministry of Power has rightly taken some proactive steps to address signs of stress on account of the latter. It has permitted domestic coal-based power plants to step up their use of imported coal to 6 per cent by weight (4 per cent so far) till March 2024. It has also directed the coal-import-based power plants (which account for about 8 per cent of the total thermal capacity of about 220 GW) to produce power at full capacity till next June.

As the Ministry points out, hydel power output was down 11 per cent in the first half of FY24, from over 100 BU in FY23. Clearly, thermal power will have to do the heavy-lifting, as renewables simply cannot do so. Hydel ordinarily accounts for 12 per cent of power output (1600 billion units annually), while solar and wind account for another 6 per cent each. Since wind and solar are reliant on weather and sunlight, their share cannot suddenly be upped. For the share of thermal power in total power output to rise above the trend of 70 per cent this fiscal, assured coal supplies to power stations are a must. This explains the Ministry’s directives.

Power supply has done better than last year, despite areas of darkness in southern States, where hydel power has flopped. According to analysts, thermal power generation at 637 BU in H1 was up by over 8 per cent, more or less keeping pace with the rise in power demand which amounted to about 850 BU. However, this increase may not be enough to offset the dip in output from other sources. Coal output this fiscal (up to September) at 428 million tonnes was up 12 per cent. With the onset of the mining season, this rise can hopefully be sustained. Thermal plants were working at 68 per cent capacity in H1, against 64 per cent last year; this can be raised. The 182 coal fired plants have stocks that are 38 per cent of the ideal (or normative) requirement, or 20 million tonnes against 54 million tonnes. Of these, 146 non-pithead plants that run on domestic coal have just 30 per cent.

While it is true that the ideal level is based on an 85 per cent PLF, the present stocks look low even for lower levels of PLF. The question is whether there are major stocks at the pithead that remain unevacuated. To the extent that this is true, the requirement of imported coal can be brought down by moving coal quickly. The sector is plagued by lack of coordination between the ministries of coal, power and railways. Reliance on imported coal at a time of high global prices can have inflationary or fiscal implications. While the absence of rail infrastructure, such as lines and rakes, cannot be fixed overnight, this must be pursued on a priority basis. India’s coal imports as a percentage of domestic coal supplies may cross the 20 per cent trend level this year, but that should not become the new trend.

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