As summer heats up with power demand also touching new records, the power sector fears that the coal situation might get uncomfortable in the coming days. The coa ministry has directed Coal India Limited to divert more “out-of-turn” coal to state and central power generating companies and this has made the private players uncomfortable.
In a letter dated May 24, the ministry of coal wrote to Coal India's CMD that as power generation has been more than the programmed schedule, it would lead to more coal demand.
“Power generation in the month of April 2018 has been more than the programmed generation and this in turn may lead to more than anticipated increase in the demand for coal from the power sector. In order to avoid possible shortage of coal at thermal power plants, it has been decided that wherever it is operationally feasible based on various factors like coal stock availability where suitable transport arrangements are in place etc., out of turn coal allotment may be made to state and central PSU gencos to meet the surged coal requirement for power generation,” said the letter, reviewed by Business Standard.
This is second such letter in a week prioritising coal supply to power sector and mostly to the government run units. Last week Mahanadi Coal Limited (MCL) had informed that following a meeting between coal, power, railways and finance ministry, rakes for only power sector would be dispatched from MCL.
The Railway Board also in a letter to all its zonal offices had directed them to “grant higher priority in loading of coal for power sector houses from good sheds so as facilitate higher supply of coal to power sector.”
In a telephonic conversation, Rajesh Sinha, additional secretary, ministry of coal clarified that out of turn coal supply means that the states are being pressured to take coal above their lowest contracted supply through whatever means available. He said currently around 240 rakes are supplying coal to power sector.
“We want states to take more coal, through railways, roads or railway cum road route. There is close to 48 million tonne coal at the pit head of coal mines ready to be dispatched. There would be no bearing on the coal supply to others be it private units or under schemes of coal supply such as SHAKTI,” he told Business Standard.
Sinha also said the MCL notice has been withdrawn. Regarding supply of coal to steel and captive power sector, he said the ministry is trying its best to meet their demand.
This move by the Centre including ministry of coal, power and railways however has irked the captive power producers (CPPs) and the privately owned independent power plants (IPPs). Their industry bodies have expressed displeasure to such plan as it will hurt their operations.
Last year during September to December, CPPs and IPPs units faced shortage of coal and had alleged that coal was being diverted to state and central gencos. The deficit started in September 2017 touching a low of six days of average coal availability with power units in October, 2017. Close to 11,000 Mw of units were under forced outage due to low coal stocks. In December, it improved slightly to 10 days and now stands at 12 days.
“Discrimination based on ownership of assets put into question the sanctity if commercial contracts signed by CIL. This would lead to more stress for the bankers. This is against the PM’s states policy of level playing field and ease of doing business,” said A K Khurana, director general, Association of Power Producers (APP).
This paper reported today that India’s power demand touched a record high of 171,000 Mw which is close to eight per cent higher than last year, same month. During an inter-departmental meeting in February with coal & railways, the ministry of power acknowledged that coal shortage had hit power generation during 2017 and coal supply still is a sore point. It also said the sector would need 615 million tonnes of coal supply in the coming fiscal. This would also entail increased demand of railway rakes of 288 per day to meet the demand.
In a letter dated May 24, the ministry of coal wrote to Coal India's CMD that as power generation has been more than the programmed schedule, it would lead to more coal demand.
“Power generation in the month of April 2018 has been more than the programmed generation and this in turn may lead to more than anticipated increase in the demand for coal from the power sector. In order to avoid possible shortage of coal at thermal power plants, it has been decided that wherever it is operationally feasible based on various factors like coal stock availability where suitable transport arrangements are in place etc., out of turn coal allotment may be made to state and central PSU gencos to meet the surged coal requirement for power generation,” said the letter, reviewed by Business Standard.
This is second such letter in a week prioritising coal supply to power sector and mostly to the government run units. Last week Mahanadi Coal Limited (MCL) had informed that following a meeting between coal, power, railways and finance ministry, rakes for only power sector would be dispatched from MCL.
The Railway Board also in a letter to all its zonal offices had directed them to “grant higher priority in loading of coal for power sector houses from good sheds so as facilitate higher supply of coal to power sector.”
In a telephonic conversation, Rajesh Sinha, additional secretary, ministry of coal clarified that out of turn coal supply means that the states are being pressured to take coal above their lowest contracted supply through whatever means available. He said currently around 240 rakes are supplying coal to power sector.
“We want states to take more coal, through railways, roads or railway cum road route. There is close to 48 million tonne coal at the pit head of coal mines ready to be dispatched. There would be no bearing on the coal supply to others be it private units or under schemes of coal supply such as SHAKTI,” he told Business Standard.
Sinha also said the MCL notice has been withdrawn. Regarding supply of coal to steel and captive power sector, he said the ministry is trying its best to meet their demand.
This move by the Centre including ministry of coal, power and railways however has irked the captive power producers (CPPs) and the privately owned independent power plants (IPPs). Their industry bodies have expressed displeasure to such plan as it will hurt their operations.
Last year during September to December, CPPs and IPPs units faced shortage of coal and had alleged that coal was being diverted to state and central gencos. The deficit started in September 2017 touching a low of six days of average coal availability with power units in October, 2017. Close to 11,000 Mw of units were under forced outage due to low coal stocks. In December, it improved slightly to 10 days and now stands at 12 days.
“Discrimination based on ownership of assets put into question the sanctity if commercial contracts signed by CIL. This would lead to more stress for the bankers. This is against the PM’s states policy of level playing field and ease of doing business,” said A K Khurana, director general, Association of Power Producers (APP).
This paper reported today that India’s power demand touched a record high of 171,000 Mw which is close to eight per cent higher than last year, same month. During an inter-departmental meeting in February with coal & railways, the ministry of power acknowledged that coal shortage had hit power generation during 2017 and coal supply still is a sore point. It also said the sector would need 615 million tonnes of coal supply in the coming fiscal. This would also entail increased demand of railway rakes of 288 per day to meet the demand.
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