Stockpiling coal ahead of rising demand

On Wednesday, the power ministry advised states to import coal and stockpile for 10 per cent blending at the regional power stations with domestic coal to ensure all imported coal-fired plants remains in operation amidst the rising electricity stretched fuel supply.

In a meeting, power minister RK Singh said that blending imported coal will permit state utilities to efficiently utilize domestic coal in plants closer to mines, which will assist in maintaining adequate fuel stock. As per the ministry statement, it is simpler to transfer electricity rather than coal extensively to far off states.

“In order to avoid long distance coal transport in respect to certain state gencos (generation companies), tolling facility would be allowed up to 25 per cent of linkage coal,” the official statement said, recommending that gencos should have limited blending with imported coal up to 10 per cent.

The government has likewise directed states having power supply agreements with imported coal-based plants, to guarantee such plants to remain operational at “fair and reasonable” tariffs. The ministry added that all functional issues of such plants will be resolved to make them fully operational in advance.

Recently, the ministry had asked all states having agreements with imported coal-based power plants to find all legitimate ways to guarantee the operation of such plants. The ministry also directed states to offer their capacity in the open market where tariffs had increased to Rs. 18.

Despite the rise in the domestic coal production to 8 per cent and despatches by Coal India meeting 80 per cent of demand, fuel inventories at power plants averaged nine days against the CEA (Central Electricity Authority) norm of 24 days last year. Industry giants highlight the limitations of rail routes and concerns over the quality of coal being supplied amidst rising power demand as the reason behind it.

Once again, the low stock position has raised a crisis situation similar to last year, when low stocks constrained power plants to close in the August-October period after monsoon rains affected coal production and supply.