Non-energy sectors write to PM: Fair supply of coal

Weak domestic coal supplies from the non-electric sector – with the government prioritizing the transport of coal to thermal power plants with low stocks – prompted the industry to appeal to Prime Minister Narendra Modi for a fairer distribution of dry fuel .

As many as 10 industry bodies noted that weak fuel supplies to non-energy sectors, such as aluminum, steel and cement, had forced players to source coal at significantly higher prices. on the open market and to buy electricity from exchanges, further inflating the price. energy cost. The industry call comes at a time when 85 of 150 thermal power plants, which use domestic coal, are facing extremely low inventory levels that have forced states to source expensive power from exchanges and led to power cuts in several states including Punjab, Haryana, Maharashtra, Uttar Pradesh and Andhra Pradesh.

“The situation has escalated to such a level that it could force many industries to curtail forced shutdown production,” said the group of 10 associations, including Aluminum Association of India, Sponge Iron manufacturers of India and Coal Consumers. ‘Association of India. letter to the Prime Minister. The representation noted that Coal India’s coal shipments fell in the captive power (by 32%), steel (27%), cement (14%) and sponge iron sectors ( 20%), compared to the 2020 financial year, when it should have increased under normal circumstances. The government has been prioritizing coal deliveries to thermal power stations since September 2021 as power stations face issues of low coal stocks due to higher electricity demand, amid low supply to power stations imported coal. The letter called for a fairer supply of coal between electric and non-electric sector consumers, noting that supply to the non-electric sector was well below the 25% of supplies allocated to them under central guidelines, resulting in more than 4,000 rakes of coal deliveries to industry remaining outstanding.

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Expensive power

The industry call comes at a time when 85 of 150 thermal power plants, which use domestic coal, are facing extremely low inventory levels that have forced states to source expensive power from exchanges and led to power cuts in several states including Punjab, Haryana. , Maharashtra, Uttar Pradesh and Andhra Pradesh.

“The current situation has also forced industries to source electricity from the stock exchange, fueling an unwarranted increase in electricity demand and leading to an avoidable inflationary impact on economic actors,” the letter said.

Aluminum, steel and cement producers rely on captive power plants that use domestic coal to generate electricity for their own consumption. The average market clearing price of electricity in the daily market on the India Energy Exchange has been at or near 12 rupees per unit (kilowatt-hour), the highest allowed level, over the past five days. The letter added that keeping the plants shut down creates overall system inefficiency in the form of unnecessary coal transportation and higher specific consumption in the units due to low coal utilization. capacity and increased the cost of finished goods. The rise in the price of imported coal and the increase in demand for electricity, due to the post-Covid economic recovery, are the main causes of the decline in coal inventories at thermal power plants, according to government officials.

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