As per Central Electricity Authority, as on 4 October, 80 per cent of the plants, with a production capacity of 132,229 MW, have critical or supercritical stocks of coal with them and thermal power plants have zero day’s worth of coal supply.
While there was a 15 per cent increase in electricity demand in August 2021 compared to August 2019, the coal supply in August and September was disrupted as there were continuous rains.
The Current Coal Shortage Crisis
Coal-fired thermal power plants are facing an acute shortage in coal supply which may impact the amount of electricity generated. Coal accounts for 202,805 MW or 52.6 per cent of the total electricity generated in India. The Central Electricity Authority (CEA) monitors 81 per cent of the total capacity or 165,066 MW, generated by 134 thermal plants.
As per CEA, as on 4 October, 80 per cent of the plants, with a production capacity of 132,229 MW, have critical or supercritical stocks of coal with them. Sixteen thermal power plants have zero day’s worth of coal supply.
The shortage in coal stocks may lead to electricity shortage. According to Power System Operation Corporation Limited (POSOCO), as on 5 October, there was a shortage of 75 Million Units (MU), with the northern region facing the maximum shortage followed by the eastern region.
Reasons for shortage
According to CEA, out of 102 plants facing shortage, 55 thermal power plants had critical supply due to less supply from various coal fields such as Northern Coal Fields (NCL), Mahanadi Coal Fields (MCL), South Eastern Coal Fields (SECL), etc. 13 plants have been restricted supply of coal because of non-payment of dues, 10 plants had not maintained supply of coal stocks and four plants have shortage of coal because of unloading/transportation problems.
According to the government, there has been an uptick in the electricity demand. The energy demanded in August 2021 was 129.5 Billion Units (BU) which is 15 per cent more than the total energy demanded in August 2019 at 112.9BU before pandemic.
While there was an increase in demand, coal supply in the months of August and September was disrupted as there were continuous rains. This led to lower dispatch from coal mines during this period. But the government said that the dispatches have picked up again.
Measures being taken
The Union Power Ministry constituted a Core Management Team (CMT) in August 2021 to augment the supply of coal to thermal power plants facing acute shortage. It had ordered re-directing supply of coal from power plants having more supply to power plants which had critical supply.
In September, it was decided by the government that power plants having coal stock of more than 10 days supply, but where plant load factor (PLF) is less than 40 per cent coal supply would be regulated to the extent of 100 per cent. It was also decided that coal supply to the power plants having coal stock of more than 18 days would also be regulated to the extent of 100 per cent and coal supply to the power plants having coal stock ranging from 11 to 18 days and having PLF more than 40 per cent, will be regulated to the extent of 50 per cent.
On 5 October, the Ministry of Coal amended Mineral Concession Rules, 1960 with a view to allowing the sale of coal or lignite, on payment of additional amount, by the lessee of a captive mine up to 50 per cent of the total coal or lignite produced in a financial year, after meeting the requirement of the end use plant linked with the mine.
This move would allow for releasing of additional coal in the market by enabling greater utilisation of mining capacities of captive coal and lignite blocks, which were being only partly utilised owing to limited production of coal for meeting their captive needs. Availability of additional coal will ease pressure on power plants and will also aid in the import-substitution of coal.
India also now stares at record coal prices if it looks to import the commodity. Coal prices internationally have skyrocketed, with coal futures reaching record highs in the first week of October. The Newcastle Coal futures of Australia, considered the benchmark index for the Asia Pacific region, also reached an all-time high in October.
The rise in prices is due to a surge in coal demand from China and record natural gas prices in Europe.