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Coal India had alerted Centre, CEA about impending coal shortage in Oct 2020

Coal India had alerted the Centre of an impending coal shortage crisis way back in October 2020 as thermal power plants were continuing to regulate coal intake from the coal miner
Coal India had alerted Centre, CEA about impending coal shortage in Oct 2020
Coal India had alerted Centre, CEA about impending coal shortage in Oct 2020
  • What precipitated the situation was the unforeseen escalation in power generation from the second week of August and the insatiable appetite for coal
  • Generally, CIL builds up coal inventories at power utilities during the first quarter but the Covid-19 pandemic posed a hindrance to this

New Delhi: State-run Coal India Ltd (CIL) had alerted the Centre of an impending coal shortage crisis way back in October 2020 as thermal power plants were continuing to regulate coal intake from the coal miner, two highly placed sources who spoke to PSU Watch on the condition of anonymity said on Monday. One of the two sources quoted above said, “We had been writing to the Power Ministry, the CEA (Central Electricity Authority) and power generators since October last year, asking them to not regulate coal intake and keep lifting coal so that there is no coal stock crisis in the future. But despite that, they continued to regulate coal intake and use their own coal stock.”

“If you look at it, at the beginning of the year (FY 2021-22), we had nearly 28.7 Million Tonnes (MT), close to 29 MT, which was 14 days’ coal stock. It was only at the end of August, starting from August 24, that the coal stock plunged by 11 MT on account of a spurt in demand from power utilities, which is unprecedented,” said the official.

CIL supplies 117.6 MT of coal to thermal power plants in Q2

According to fresh data released by CIL on Monday, Coal India has supplied 117.6 million tonnes (MT) of coal to thermal power projects during July-September quarter amid soaring coal demand and depleting stocks at coal fired power plants. The figures for the quarter are the highest for Q2 of any year, registering a growth of 12.3 percent. This is a volume jump of 13 MT compared to 104.7 MTs of the same quarter last year. The growth is even higher at 17.2 percent when matched against 100.3 MT of Covid-free second quarter of FY20.

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CIL’s total off-take shot up to 147.3 MTs at the quarter ending September’21 which is 9.7% more against comparable quarter of last year when the off-take was 134.3 MTs.  

“The company is responsive to the importance of improving coal stocks at thermal power stations. We are rallying our efforts to restore normalcy as early as possible by pushing additional quantities. The demand is far outstripping the supplies now,” said SN Tiwary, Director (Marketing) of CIL.

CIL supplied 246 MT of coal to power sector in H1

In fact, during the first half of this financial year, CIL’s off-take to power sector at nearly 246 MT was the highest-ever for this period so far but the demand from this sector was even higher as an outcome of a sudden spike in coal-based generation to unprecedented levels. There was an additional supply burden of around 10 MT to 12 MT on CIL to cater to domestic coal-based TPPs due to curtailment of power generation by plants which source their coal from overseas, where the prices have skyrocketed and holding firm.  

Explained: Spurt in power demand & coal shortage

Generally, CIL builds up coal inventories at power utilities during the first quarter but the Covid-19 pandemic posed a hindrance to this, and extra stocking was not possible. Compounding the woes, extended monsoon at coalfield areas interrupted production and supplies. Primarily, what precipitated the situation was the unforeseen escalation in the power generation from the second week of August and the insatiable appetite for coal.
 
“Reasons aside, the company is fully seized of the imperative need to meet the power sector’s demand. With the monsoon on the wane, increased production and availability of more coal is will help us stabilise stocks at power plants,” said a senior executive of the company.    

Despite heavy rainfall, CIL produced close to 126 MTs of coal during the current fiscal’s Q2, another record high for the second quarter, posting 9.6 percent year-on-year growth. Last fiscal’s second quarter output was 115 MT.  

CIL managed to liquidate a whopping 57 MT of its pithead stock during the first six months of the current fiscal with bulk of it directed towards power utilities. This is the highest-ever stock reduction not only for any H1 but on yearly basis as well so far.

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