Is another coal shortage crisis looming over India?

In December last year, the Federation of Indian Mineral Industries (FIMI) shot off a letter to the Prime Minister claiming that the coal crisis was still prevailing, and was affecting the profitability of non-power industries.

It came three months after several states were hit by power outages due to coal shortage. And two months after finance secretary TV Somanathan assured the nation that the coal shortage was temporary.

Now, India is again seeing the emergence of a complex demand-supply mismatch in coal. Both the power generation and the non-power sectors are claiming that the supply is below optimum levels. They have also alleged that the national miner, Coal India Ltd, has been supplying bad quality coal. Non-power sector consists of a range of manufacturing units.

Data available on the National Power Portal shows that at the national level, the current stock of coal at power generation units stands at an average of 9.8 days, which amounts to 38 per cent of the normative 24 days stock. The critical stock threshold is 7 days or less.

Power units that are situated away from the mines, but close to high-consumption states in the north, west and south of the country, are facing a far more precarious situation.

Industrial states like Maharashtra, Gujarat, Andhra Pradesh and Karnataka are the worst-hit since their state-owned units have an average of just 4-day worth of coal stock.

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For their part, independent power producers have also been crying foul over the low supply of coal. Sources told Business Standard that in the weekly meetings hosted by the ministry of coal, the private units have been complaining since November that they are not getting adequate coal supply.

At present, the national average coal stock at NTPC units is 13 days and at independent power producers, it is nine days.

It is not just the power generation sector that has been hit. Over the August-October period last year, most power plants in the country had reported critical stock levels and a severe shortage of coal.

As a result, the Centre issued an order saying that coal supply to power units should be prioritised. Subsequently, the non-regulated sectors faced a situation where there was limited or even no-supply of coal to them. In fact, these sectors still claim to be reeling under a shortage of coal.

For example, in its recent letter to the ministry of coal, the Aluminium Association of India has said that since August 2021, the non-regulated sectors are being supplied with just 40-50 per cent of their coal requirement.

For its part, the ministry of coal has called this shortage a seasonal phenomenon and said that the Indian Railways is responsible for the drop in supply.

The ministry cited the domestic coal supply to the power sector till January 2022, which was 552.65 million tonnes. A senior coal ministry official told Business Standard that this was 26.56 per cent higher than last year and 18.7 percent higher over the same period in 2019-20.

Coal ministry officials also said that complaints from the non-regulated sectors were without any merit.

Most experts blamed the heavy rains for last year’s crisis, as it hampered the movement of coal from mines to power generation units.

The government and all the stakeholders should work together to avert any crisis as demand for electricity will see further rise in the months to come.

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