Looming crisis: As power demand hits a peak, gencos told to import coal

Domestic coal supply to be regulated for those not adhering to the directive

As electricity demand rises to a record level again, the Union ministry of power has asked all power-generating companies to import coal up to 6 per cent of their total requirement.

Though coal production has increased in Q4 of the current financial year, the power ministry said that is not enough to meet the “unprecedented increase in demand for electricity”.

“In light of a scenario where energy demand is increasing and the increase in coal supply is not commensurate with the domestic coal requirement, the need has arisen to continue the use of imported coal for blending purposes. The MoP directs all gencos to import coal for blending 6 per cent (by weight) for the remaining period of the current financial year and H1 of the next financial year (until September 2023),” the ministry stated on Monday.

The note further said, the domestic coal supply of those gencos who do not follow these instructions will be restricted on a pro rata basis. 

According to the data by GRID-INDIA, energy demand in the country has increased sharply, and shall remain high until H1 of FY23-24. The power ministry is expecting a shortfall of 24 mt of domestic coal during H1FY24. This shortfall is translating to a 100,000- to 300,000-tonne daily deficit in the supply of domestic coal.

“It is assessed coal stock position without blending of imported coal in domestic coal-based plants would decline to zero which will severely impact the power supply position in the country," said the note.

Currently, the coal inventory with power units stands at 32 mt (roughly 11 days’ stock); inventory with coal companies is 36 mt.

Last week, the peak power demand of the country crossed the 200-Gw mark, matching the peak demand during the summer.

The ministry also emphasised on efficient transport of coal. “In order to ease logistics pressure on the Railways, the MoP has planned to transport available coal from the MCL region through (rail-ship-rail) RSR mode to TPPs located in the northern and western parts of the country. Accordingly, directions have been issued to source 10-15 per cent of their requirement through the RSR mode to the states of Gujarat, Rajasthan, Maharashtra, and Punjab, as well as NTPC,” the ministry said.

Last year, during the summer months, when gencos and states claimed acute coal shortage, which led to the power ministry directing them to import coal. The directive was rolled back in three months. The imported coal procured by national miner Coal India received less than 10 per cent buyers.  

States have been pitching to use the RSR route or coastal shipping to avoid the congestion on the rail freight routes. Recently Rajasthan state government decided for the first time to utilise the Sagarmala route. It will load coal at Paradip Port from Talcher (MCL) in Odisha using railways, and move it till Deendayal Port Trust (Kandla Port) in Gujarat through coastal shipping. Thereafter the rail route would be used to take it to beneficiary thermal power plants.

Punjab also said it would take a similar route to procure coal.

MCL us one of the best performing coal companies of CIL however marred with logistics bottleneck. Officials said the RSR route would solve the problem and also ensure surplus coal supply. 

Looming Crisis

• Despite increase in coal production in Q4 of the current financial year, the power ministry said that is not enough to meet the “unprecedented increase in demand for electricity”
• The power ministry is expecting a shortfall of 24 mt of domestic coal during H1FY24
• Currently, the coal inventory with power units stands at 32 mt (roughly 11 days’ stock)
• States have been pitching to use the RSR route or coastal shipping to avoid the congestion on the rail freight routes
• Last week, the peak power demand of the country crossed the 200-Gw mark
• Energy demand in the country has increased sharply, and shall remain high until H1 of FY23-24