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Coal stocks at more than 100 thermal power plants in India have fallen below 25% of the required stock, according to the latest data (critical mark). The stock of more than 50 thermal plants has fallen below 10%, prompting states to seek additional coal supplies from India’s sole coal producer, Coal India Ltd. (CIL). Thermal power plants, which are mostly powered by coal, provide 70% of India’s electricity.
According to data from the Central Electricity Authority (CEA), India’s power generation via thermal plants using domestic coal stood at 182.39 GW on April 19, 2022, with an average coal stock of 34%. Meanwhile, power plants using imported coal generated 16.73 GW, with an average coal stock of 34%. Nine thermal power plants with a combined capacity of 3.56 GW are currently offline.
85 of the 173 thermal power plants that use domestic coal have less than 25% stock, while 11 of the plants that use imported coal have reached critical levels.
The primary cause of coal scarcity is rising power demand. Demand increased to 124.2 BU per month in 2021, up from 106.6 BU in 2019. The demand is expected to rise to 132 BU by 2022.
The Centre’s core management team (CMT) examined the reasons for the supply shortage in October 2021, when India faced a major coal crisis due to shipping delays, with stocks falling to just four days.
Heavy rains in coal-mining areas such as Gujarat, Punjab, Rajasthan, Delhi, and Tamil Nadu, according to the CMT, have resulted in lower coal production. Furthermore, most thermal plants had insufficient coal stockpiles prior to the monsoon season, causing them to fall below critical levels.
The Centre also stated that imported coal accounted for 43.6 percent of power generation, resulting in an additional demand of 17.4 MT of domestic coal, further depleting coal reserves.
CIL announced on Tuesday that during the first half of April 2022, it increased its supplies to thermal power stations by 14.2 percent over the same period last year. Coal production has increased to 1.64 million tonnes (MTs) per day, up from 1.43 MTs in 2021.
The company also stated that during the first half of April, it increased production to 26.4 million tonnes, representing a 27 percent year-over-year increase. Additionally, until May 31, 2022, 8.75 MTs of coal will be made available to state and central generating companies via rail, according to CIL.
According to Fitch, India’s daily electricity deficit increased from 0.3 percent in April 2022 to 1 percent. As a result, the price of electricity traded on Indian exchanges increased by 85 percent in March, from an average of Rs 3/kWh to Rs 8.23/kWh. Short-term power exchange rates have been capped at Rs 12/kWh by the CEA in order to keep prices in check. Low coal supplies, according to Fitch, will prevent NTPC from increasing its plant load factor — the ratio of power output to fuel — above 70.7 percent. NTPC had increased its load to this level in 2021, up from 66% in 2020.
States like Andhra Pradesh, Gujarat, Maharashtra, Jharkhand, Bihar, Haryana, and Uttarakhand have used load shedding and planned outages to meet the peak demand. Since April 1, Jharkhand has experienced a 10-12 percent supply shortage, followed by Andhra Pradesh (10%), Uttarakhand (8-10%), Madhya Pradesh (6%), and Haryana (5%). (4 percent ).
The Centre has allowed states to use up to 25% of their captive coal reserves to meet rising domestic demand. It also allows power plants to blend imported coal up to 10% of the time to reduce CIL’s burden. While the Centre considers stockpiling imported coal, higher coal prices make this difficult.
The Centre passed mining reforms in 2020, ending CIL’s monopoly on India’s coal production. The law allowed commercial coal mining to begin immediately, with 50 blocks available. It also allowed anyone, not just captive consumers, to bid for coal mines (i.e companies which use coal for running their businesses).
The law also promised a Rs 50,000 crore investment to diversify CIL’s operations and a revenue share rebate for early coal production. States, particularly mineral-rich states like Jharkhand and Bihar, have expressed strong opposition to the law, claiming that it will have a negative impact on a large tribal population and forests. The Supreme Court is currently hearing the case.
