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State power generation utilities must continue to blend 10% imported coal: Centre reiterates

By, New Delhi
Jul 24, 2022 05:45 AM IST

The country’s thermal power plants will be able to maintain coal inventory of only between 22-25 million tonnes at any given point during the ongoing monsoon season, a scenario that could turn precarious if electricity demand spikes, ministry officials said on Saturday.

State power generation utilities must continue to blend 10% imported coal, the Union power ministry has reiterated, despite objections by several states because the imported mineral is eight times more expensive.

State power generation utilities must continue to blend 10% imported coal, the Union power ministry has reiterated, despite objections by several states because the imported mineral is eight times more expensive. (REUTERS)
State power generation utilities must continue to blend 10% imported coal, the Union power ministry has reiterated, despite objections by several states because the imported mineral is eight times more expensive. (REUTERS)

The country’s thermal power plants will be able to maintain coal inventory of only between 22-25 million tonnes at any given point during the ongoing monsoon season, a scenario that could turn precarious if electricity demand spikes, ministry officials said on Saturday.

Coal-fired power plants had a combined stock of 23 million tonnes as on July 14, which is enough to run the utilities for two weeks if the weather remains favourable, according to official data seen by HT.

The coal ministry has assured the supply of 172 million tonnes to power utilities till September, significantly more than 155 million tonnes promised earlier, power ministry officials said. That might, however, not be enough as the power ministry has projected peak demand during the monsoons to rise up to 215,000 MW or even more.

“Overall, the stocks at domestic thermal power plants are not going to see any drastic increase this monsoon. It is going to hover around 22-25 million tonnes. So, in case major mining areas witness heavy rains and northern India remains dry, meaning an increase in power demand, then the crisis could set in again,” a power ministry official said, requesting anonymity.

Many states in the country faced hours of outages during the summer (March to May) because of unrelenting surge in power demand due to an early heatwave, rapid economic recovery after the Covid-19 pandemic, and shortage of coal to generate power. The situation is expected to aggravate further in the monsoon season if cash-strapped power producers do not have adequate coal stock. Generally, coal off-take from mines gets affected during the monsoon.

India has been suffering from extreme heat conditions this summer, with many experts linking the early onset of an intense summer to the climate crisis. The steep electricity use caused widespread power cuts in April, as the authorities scrambled to manage demand amid dwindling coal supplies.

“The power ministry is keeping a close watch on the stocks and coordinating with railways, coal and road transport ministries to remove logistical barriers to the greatest extent possible,” the ministry official added.

In April, May and June, blending of imported coal by generation companies saved as much as 10 million tonnes of domestic coal, power ministry data showed.

“If the government had not pushed for importing coal and increasing blending in power plants, then the domestic coal stocks would have been 13 million tonnes at present,” a second official said, declining to be named. “No doubt dispatches of coal have been more than last year, but if we talk about coal requirement for power generation, then we have seen in the past three months that blending of coal has supported the increase in demand and has taken some load off from domestic coal.”

In the three months to June, the first quarter of the current financial year, the share of power generation through blending was 3.1%, which in just the first 11 days of July increased to 6%, according to power ministry data.

State-run utility NTPC alone has increased its blending from 6.4% in the first quarter to 10.5% till July 11. The Damodar Valley Corporation, another government-run generator, has increased blending from 5.6% to 11% in the same period. Independent power producers increased blending to 3.4% from 1.85%.

However, generation companies run by the states have seen sluggish growth in blending imported coal. Against the target of going up to 10%, the share of all states put together in coal blending was a meagre 0.5% in the first quarter, which has increased to 2.6% till July 11.

On Monday, the Congress accused the central government of benefitting its “friends” by making blending of imported coal mandatory for domestic power producers. The allegation came in the backdrop of the Adani Group winning a contract to import 2.416 million tonnes of coal, based on which it quoted a price of 16,700 a tonne, compared with the cost of domestic coal at 2,000 per tonne.

Due to the high cost of imported coal, states such as West Bengal, Telangana, Tamil Nadu, Jharkhand ruled by opposition parties, and even Uttar Pradesh, which is ruled by the Bharatiya Janata Party, have been opposing the Centre’s mandate. It was only last week that Uttar Pradesh agreed to use imported coal. The Haryana government has indicated that power bills could rise as it too has agreed to use imported coal.

State generation companies are supposed to import 10% of their coal requirement for blending purposes, according to the Union power ministry’s directive on October, 2021. The central government had asked states to place orders in such a way so that delivery of 50% quantity could be ensured by May 31, 40% by June 30 and 10% by October 31.

Few states had placed orders because of which on May 18, the power ministry issued a warning to all utilities, including independent power producers, that if imported coal doesn’t start arriving from June 15, domestic coal allocation to the defaulter will be reduced by 5%.

Local coal production has increased in India, but has lagged the growth in power demand. The requirement of domestic coal during the first quarter ended June 30 was projected to be about 20% more than the same period of last year.

India’s coal production in 2021-22 was 778.19 million tonnes in comparison to 716.083 million tonnes in 2020-21. In the current financial year, the country has produced 204.876 million tonnes as of till June 30 compared with 156.11 million during the same period of last year.

However, power demand has gone up significantly after the Covid-19 pandemic and because of 28.6 million new consumers have been added under the government’s Saubhagya scheme, which aims at universal electrification.

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