Home > Coal, Power > Coal India Stir Further Tightens Supply To Power Plants

Coal India Stir Further Tightens Supply To Power Plants

A temporary fall in production of coal has exposed the vulnerability of the sector to supply by a single company, namely Coal India. This dependence is likely to continue until the time the sector is deregulated and price gap between imported and domestic coal exists.

Workers of Coal India Ltd went on a one-day strike on October 10 to demand bonus payouts of Rs.23,500 per employee against Rs.17,000 paid by the company. The company reached an agreement with the unions to pay Rs.20,000 bonus to each worker, and an additional Rs.1,000 as a Diwali gift. Given that Coal India has nearly 3.7 lakh employees, we estimate additional bonus payouts around Rs.148 core.

The daylong strike at Coal India resulted in a production loss of about 1 million tonnes. This loss in production comes at a time when the country is reeling under severe coal shortage. Coal production in the country has been affected in the current financial year due to several reasons.

  • During August and September, heavy rains in coalfields adversely affected production.
  • Inundation of mines and flash floods in a number of rivulets, affected transportation of coal to rail sidings.
  • Heavy rains also resulted in coal becoming wet, making them unfit for power generation.
  • Heavy rain was followed by a political stir in the Telangana region that impacted evacuation of coal from pitheads to power generation plants in the southern region, particularly NTPC’s 2600-mw Ramagundam plant.

The daylong workers’ strike led to loss of the day’s output on Oct 10.

Shortage of coal led to stocks in the country getting depleted sharply. According to media reports, about a third (29 units) of coal-based power plants faced critical coal stock position of less than four days. Another 44 units faced coal stocks of less than a week.

Table below highlights the low coal stock position at some of the power plants in the country.

Coal Stock at Power Stations

Power station Capacity (Mw) Daily coal required (in ‘000 tonnes) Normative stock required (days) Actual stock (days)
Badarpur (Delhi) 705 12.3 30 1
Chhabra (Rajasthan) 500 6.2 30 0
Singrauli (UP) 2,000 31.6 15 0
Sipat (Chhattisgarh) 1,660 16.8 20 3
Khaparkheda (Maharashtra) 1,340 15.1 25 1
Tuticorin (Tamil Nadu) 1,050 17.9 30 1
Kahalgaon (Bihar) 2,340 39.1 15 1

Source : CEA, Business Standard

The government has directed power plants with sufficient coal stocks to divert some of their stocks to units with low fuel stocks. The ministry of coal has also decided to offer some of the e-auction coal to the sector this month. This will be made available against already concluded Fuel Supply Agreements on ‘as is where is basis’.

Power utilities will be expected to make their own arrangements for lifting and transportation. It must be noted that 10% of the coal stocks are kept aside for e-auction. To increase coal movement, 180 rakes will be daily made available compared with 153 rakes presently. Out of these, 145 rakes will be reserved for the power sector.

Shortage of coal and a consequent reduction in power produced has made short-term power prices and volumes at power exchanges go haywire. “The average power tariff has increased to Rs.7.0-7.5 per unit, from Rs.2.5-3.5 about 20 days back, due to mismatch in demand and supply. The traded volume in the exchange has come down to 35,000MW/hr from 1 lakh MW/hr on a daily basis,” said Rajesh Mediretta, India Energy Exchange senior vice-president for business development.

It must be noted that a temporary fall in production of the fuel has exposed the vulnerability of the sector to supply by a single company, namely Coal India. This dependence is likely to continue until the time the sector is deregulated and price gap between imported and domestic coal exists.

Advertisements
Categories: Coal, Power
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: