Recurring Coal Shortages are Crippling Thermal Power Production in the Country!

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  • The searing summer temperatures, especially in the western and northern parts of the country, are making people extremely uncomfortable in carrying out their day-to-day activities. Unusually high temperatures, 5 to 6 degrees above normal, sweeping across the country has placed tremendous pressure on the power generation too. Unfortunately, power generation is proving to be inadequate in line with the growing demands for want of crucial resources. As you are aware, the country is largely dependent on thermal power generation where a seamless supply of coal is necessary to produce the desired quantity of energy.

PC: New.Siemens

  • However, the prevailing situation vis-à-vis power generation is anything but satisfactory. Further scrutiny on the matter would reveal some of the hindrances affecting the same. Note that India’s power sector often grapples with cash-strapped electricity distribution companies running up overdue power generators. Unfortunately, this problem persists as overdue from large state government-owned distribution companies were in the range of a mind-boggling Rs. 1 lakh crore at the end of February. To compound the already strained sector facing a perennial problem, new challenges have been added.
  • As you must be aware, for the second time in about seven months thermal power plants are grappling with coal inventory dipping to critical levels considerably slowing down the generation. Given that both coal mining and logistics through railways are dominated by the Government of India-owned enterprises, it reflects poorly on the official management of an essential economic input. Last week, the Tamil Nadu government wrote to the Prime Minister seeking help in the form of adequate railway rakes to transport enough coal. Several other states have followed suit. Needless to mention, this embodies the seriousness of the situation in no uncertain terms.

PC: Saurabh Kumar

  • Moreover, on April 01, the central electricity regulator capped the price on energy exchanges at Rs. 12/kWh to insulate the system from skyrocketing rates. The price cap came against the backdrop of depleting coal inventory with plants. On April 21, 62% of the plants had coal stock that was classified by the Central Electricity Authority (CEA) as critical, inventory of less than 25% of the normative stock. Most worryingly, a month earlier about 49% of plants were classified as critical. CEA’s reports show that many plants have indicated inadequacy of railway rakes as the reason for low stock. And it’s inexplicable as coal provided about 49% of railway freight earnings.
  • As such, it’s puzzling how railways finds itself unable to anticipate the infrastructure needs of the most important item it moves. Mind you, the benchmark coal Australia price has more than doubled in a year to an average of $197 per tonne in the January-March quarter. Remember, India’s struggle with coal supply to its power plants has come about at a time when manufacturing still has spare capacity. It’s a timely wake-up call and any ad-hoc measures will not work any longer. As the primary logistics provider in the sector, the railways need to step up alongside much-needed reforms to ensure a more than adequate supply of coal to consumers.