Coal stock for just four days at 25 power plants

Mansi Taneja / New Delhi Apr 12, 2012,
Business Standard
As the country braces for a harsh summer ahead, the average coal stock at about 25 thermal power plants has reached a ‘supercritical’ level. These plants have enough supplies for less than four days, against a normal range of 20-30 days.

According to data from the Central Electricity Authority, the stock at 30 plants, with a total capacity of about 26,320 Mw, is at a critical level (would last less than seven days). Of these, 25 plants, with a capacity of over 21,000 Mw, have stocks at ‘supercritical’ levels. Four plants have virtually no stock.

Inadequate coal allocation and fewer imports are the major reasons for the decreasing stock levels at power plants. Last year, heavy rain had disrupted supplies, and a workers’ strike at Coal India, coupled with the Telangana agitation, had snapped fuel supply at many power stations.

The power industry has been facing inadequate coal supply for some time, thanks to a supply-demand mismatch. The production at Coal India is unable to match the increasing requirement of the industry. The demand for coal has grown 8.4 per cent a year over the past five years. Supply has, however, fallen grossly short, registering a dismal annual growth of 5.4 per cent during the same period. For 2012-13, while coal demand is estimated at 696 mt, 554 mt is likely to be available, leaving a gap of 142 mt to be met through imports.

On a directive from the Prime Minister’s Office and forced by a presidential directive later, Coal India is expected to sign fuel supply agreements (FSAs) committing 80 per cent supply with about 50 power companies next week. This would bring on stream about 28,000 Mw of projects commissioned before December. It would also break a three-year logjam with consumers over supply commitments.

Said former power secretary Anil Razdan, “Coal stocks at power plants for a week or 10 days is a comfort factor. But, with this kind of situation, the management needs to urgently address the problems, especially if they relate to the movement of coal through the railways.

The signing of FSAs by Coal India would give companies an assured supply, which is a positive sign.” Razdan does not see the situation going out of control. He said it would become alarming only when excessive rains hamper mining or coal movement is impacted by law and order situations. “The stock position should be back to normal in some time,” he said.

Another senior power expert said, “It is a very critical situation. This will definitely have an impact on capacity-addition plans. Also, this means we should be ready to face harsh summers ahead.”