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Blame game on over supposed coal shortage in India

19th October 2017

By: Ajoy K Das

Creamer Media Correspondent

     

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KOLKATA (miningweekly.com) – In a blame game over a supposed coal shortage in the country, India’s Coal Ministry has fingered thermal power companies for their failure to follow procedures and a lack of efficient inventory management, while demanding more supplies of dry fuel.

The Coal Ministry has claimed that it has been warning thermal power producers in the country since last June about coal stocks falling rapidly and the need to stock up in view of rising electricity demand across industry and households in the country.

The Ministry has issued advisories to thermal power plants about the need to restock fuel as per Central Electricity Authority norms that require all thermal power plants to maintain stocks of a minimum 22 days' consumption, but they have failed to do so.

The thermal power companies have been told that the reason for a loss in power generation, as currently experienced, should not be attributed to coal suppliers and that the temptation to save money in inventory building and carrying costs was to blame and not a sound way of doing business, Coal Ministry Secretary Susheel Kumar said in a statement.

The Ministry has pointed out that Coal India Limited was carrying pithead stocks of more than 30-million tons. Dispatches to power plants across the country were up 22% year-on-year in September, and these were not indications of low fuel supplies to power companies, a Ministry official said.

The ‘just-in-time’ principle of inventory management does not work for thermal power companies, simply because of the sheer volumes involved in transportation from pitheads to plants and the minimum turnaround time required by railways rakes, the official added.

Notwithstanding the stand of the Coal Ministry, information collated from various provincial governments indicated an acute shortage of coal at thermal power plants.

The provinces of West Bengal and Andhra Pradesh have given the go-ahead to West Bengal Power Development Corporation and Andhra Pradesh Power Development Corporation to import one-million tons of coal each respectively to sustain fuel supplies to power plants in their regions.

The Central Indian province of Rajasthan has reported that despite plants located in the region boasting a combined power production capacity of 4 940 MW it was currently producing a shade below 2 900 MW owing to shortage of coal. Seeking immediate allocation of coal, the Karnataka government said that power plants operated by it were currently holding coal stocks of about one day’s consumption.

While it was still not clear whether low stocks with thermal power plants were the result of lower volumes available or distribution bottlenecks or poor planning, data released indicated a slowdown in coal production growth.

CIL, accounting for over 80% of supplies to thermal power plants, recorded a marginal growth in production at 0.8%, or 231.87-million tons, during the first half of 2017/18, compared with the year-ago corresponding period.

However, offtake growth was recorded by the miner at 8%, an indication that part of rising demand was being met from pithead stocks, prompting some analysts to maintain that drawdown on stocks without incremental production growth, would not be sustainable in sustaining supplies in the medium term.

Edited by Mariaan Webb
Creamer Media Senior Deputy Editor Online

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