6 min readMay 3, 2022 07:32 PM IST
First published on: May 3, 2022 at 03:30 AM IST
The power sector in India is going through a crisis. Peak shortages in some states have reached double digits. Coal stocks available at thermal plants are at abysmal levels and about 106 plants out of 173 plants have reached a critical stage. On average, coal stocks available are only good enough for about eight days’ generation against a norm of 24 days. In some plants, the stocks available are just about enough to run the plant for a day or two more. Part of the problem of poor coal stock is also rumoured to be on account of the non-payment of dues of coal companies. But this is not the major cause of the shortage.
Let us first understand the chronology of the crisis. First, with summer approaching before time, power demand has shot up to record levels. Take the case of Delhi. The city had a maximum temperature of 43.5 degrees centigrade a few days ago, the highest in the past 12 years. Delhi’s power demand crossed 6,000 MW on April 28 which is a record. The second reason for the rise in power demand is that the economy is recovering, and demand from the industrial sector is going up. All things put together, power demand crossed 207 GW on April 29, which is about 14 per cent higher than what it was a year ago. Experts feel that the peak demand may even touch 215 GW in the coming months.
This increase in demand should have posed no problem since there was enough spare capacity available with coal-based stations operating at less than 60 per cent capacity. The problem is the availability of coal, as many plants have less than two days worth of stock. What is important to note is that this coal crisis is not because of any deficit in the supply of coal from domestic sources. Coal dispatches from Coal India during 2021-22 were 23 per cent higher than in the previous year and the corresponding figure for Singareni Collieries (a government-owned-coal mining corporation) is 31 per cent. Of course, these are aggregate figures and there could be a drop in production in the case of certain individual mines.
The fall in coal stock in power stations is because of two main reasons. The first is that due to a rise in the international price of coal on account of the Ukraine crisis, all plants that were importing coal have either stopped generating completely or are generating at much lower levels. We have a sizeable generating capacity based on imported coal, estimated at about 16 GW to 17 GW. All these plants after stopping imports are now looking for domestic coal, creating pressure on domestic coal. The second reason for low coal stocks is the non-availability of rakes with Indian railways for transporting coal. Though about 22 MT of coal may be available in power stations, if one includes the stocks available with mining companies, the figure is well over 70 MT. So, it is all a question of transporting the coal to the power stations. To make matters worse, generation from gas-based plants has also fallen due to high gas prices in the world market. Reservoirs, too, are drying up due to intense heat which will adversely affect hydro generation.
To better understand the crisis, one needs to take a careful look at the transportation problem faced by Indian railways. The railways have about 2,500 rakes which can be used for coal transportation. With a turn-around time of about four-and-a-half days (which goes up to nine days for coastal regions), the railways can provide only about 525 rakes on any single day. Of this, about 100 rakes are used for transporting imported coal and therefore, only about 425 rakes are available on a daily basis for transporting domestic coal. But only 380 rakes were being provided in the first half of April this year, though efforts are on to increase this to about 415 rakes.
The railways prefer to transport coal over short distances in order to save on the turn-around time. Consequently, coal stocks in faraway power stations are good enough for only two days of generation or less, whereas for plants nearer to the mines it can go up to nine days also. It is understood that the railways have issued a tender about three weeks ago for one lakh wagons, but it will take six to eight months for delivery. It may be added that it is not just the non-availability of rakes which is causing the problem. There is also the issue of availability of tracks since they are being used on a back-to-back basis. In order to transport more rakes for transporting coal, the railways are cancelling passenger trains. About 42 trains have been cancelled for a month involving about 750 trips. It is pretty evident, therefore, that there is a major transport bottleneck.
With efforts now being made to sort out the transportation problems, stocks will begin depleting faster. Thus production has to be enhanced so that the replenishment rate is higher than consumption. Unless we do that, the total stock of coal in the country will deplete further and it will no longer be a mere transportation problem as it is now, but a general lack of supply of coal. This is the right time to enhance coal production and build adequate stocks because once the monsoon sets in, production will fall.
Anticipating this, the government has asked the power companies to import coal for blending purposes to reduce the pressure on domestic coal. The problem is that there may be no takers for this given the high price of coal in international markets. Besides, these imports will again put pressure on the availability of rakes for domestic coal. What seems to be certain is that unless the weather relents, dark days are ahead.
This column first appeared in the print edition on May 3, 2022 under the title ‘Dark days ahead’. The writer is Senior Visiting Fellow, ICRIER and former member (Economic & Commercial), CEA
Peak shortages in some states have reached double digits. Coal stocks available at thermal plants are at abysmal levels and about 106 plants out of 173 plants have reached a critical stage. (File Photo) 
Share
