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Thursday, October 21, 2021

To fix coal crunch, captive mines’ 50% output get sale nod

Lessees of such captive mines will be required to pay additional premiums to state governments above the ones paid for coal that they sell after meeting their own requirements. The move is expected to motivate lessees of captive mines to boost production beyond their own requirements.

By: ENS Economic Bureau | New Delhi |
October 6, 2021 3:00:06 am

IN A move expected to help address the ongoing coal shortage at the country’s thermal power plants, the government on Tuesday notified rules allowing the sale of up to 50 per cent of the annual coal and lignite output of captive mines.

The move to amend the Mineral Concession Rules, 1960 is expected to benefit operators of 100 coal and lignite blocks, with an annual production capacity of 500 tonnes. Captive mines are operated by end-users of coal, including steel and power sector firms. A government release said the amended rules “paved the way for releasing of additional coal in the market by greater utilisation of mining capacities of captive coal and lignite blocks, which were being only partly utilised, owing to limited production of coal for meeting their captive needs.”

Lessees of such captive mines will be required to pay additional premiums to state governments above the ones paid for coal that they sell after meeting their own requirements. The move is expected to motivate lessees of captive mines to boost production beyond their own requirements.

Thermal plants are currently dealing with a coal shortage due to a sharp uptick in power demand, lower levels of coal production and fewer despatches due to disruptions during the monsoon, and low accumulation of stock in the April-June period.

As many as 17 thermal power plants, with a generation capacity of 21,325 MW, had zero days of coal stock as of October 3. Another 40 plants with a generation capacity of 52,510 MW have stocks of one or two days. On average, the stocks of coal available with thermal power plants are sufficient for only 4 days of operations, compared to recommended stock level of 14 days.

Explained

To help boost production

Lessees of captive mines selling coal will have to pay the state additional premiums over what they pay for coal they use themselves. The move is expected to motivate lessees of captive mines to boost production beyond their own requirements.

The shortage was seen to be more acute in non-pithead plants or the ones that are not located close to coal mines, with such plants accounting for 97 of the 107 plants seen to have critical levels of stock i.e under 8 days. As much as 131 GW of the total 165 GW of capacity for which stocks are monitored daily is currently facing “critical” or “super critical” levels of coal inventory.

The share of coal-based power in the electricity mix has risen to 66.4 per cent from 61.9 per cent in 2019, leading to an 18 per cent increase in coal consumption in August and September, as against the corresponding period in 2019.

A total of 263 rakes of coal were dispatched from coal mines on Monday, up from 248 on Sunday, with the number set to increase further, according to a government release. Coal India has increased offtake in the September quarter by 9.7 per cent to 147.3 million tonnes (mt), up from 134.3 mt in the year-ago period with a view to help address the shortage.

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