Coal-consuming firms such as private sector power producers and cement manufacturers are facing a crisis due to a shortage of the fuel - a key input, thanks to a surge in demand for electricity during summer and a rise in global prices of coal.
"Independent power producers (IPPs) are reeling under immense pressure due to unavailability of coal coupled with rising price of imported coal. A mere 55% of plant load factor itself reflects how IPPs are paralysed. With each passing day, more and more capacity is turning stranded for the private power producers," an executive at a leading private sector power producer told DNA Money.
The demand for power has reached such a state that the coal ministry has decided to prioritise supplies to state-owned power plants like NTPC over private players.
"At no fault, IPPs are facing the wrath. The government's move to prioritise PSUs for coal supply is likely to hit the sector hard," the executive of the power producer said reacting to the government communication.
Last week, a letter written to Coal India by the ministry said, "Power generation in April 2018 has been more than the programmed generation and this, in turn, may lead to a more than anticipated increase in demand of coal from the power sector. ln 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 (public sector undertaking) gencos (generating companies) to meet the surged coal requirement."
Mahanadi Coalfields, one of the mining subsidiaries of Coal India, last week even issued orders to altogether halt deliveries to all non-power customers, but withdrew the notice after an outcry from the industry.
Country's large power plants are working overtime to meet the rising demand. Since the beginning of April to May 16, power generation was 15,876 billion units against the planned output of 15,696 billion units, latest Central Electricity Authority data shows.
In a bid to feed that demand, Coal India has cut down the availability to small private sector power produces and other non-priority customers sold through e-auctions.
In March, there was no special forward e-auction for power sector while 5.7 million tonne coal was made available in the previous year. Availability for spot auction during the month was brought down to 3.79 million tonne against 5.38 a year ago.
The crisis is set to deepen further with an expected rise in the global coal prices. "The long-term outlook for the Asian thermal coal prices is improving, amid rising regional demand and falling mining investment, which partly reflects tighter environmental policies," Fitch Ratings has said.
AMID A HEAT WAVE
- Power generation in April 2018 has been more than the programmed generation. This, in turn, may lead to a more than anticipated increase in demand for coal from the power sector
- Large power plants are working overtime. Since the beginning of April to May 16, power generation was 15,876 billion units against the planned output of 15,696 billion units
- In a bid to feed that demand, Coal India has cut down the availability to small private sector power produces and other non-priority customers sold through e-auctions
- In March, there was no special forward e-auction for power sector while 5.7 million tonne coal was made available in the previous year. Availability for spot auction during the month was brought down to 3.79 million tonne against 5.38 a year ago
