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APR 11 2013

Problem of scarcity becomes problem of plenty

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 11th APR 2013

While the government was busy discussing how to ramp up coal output for industries, the situation itself seems to have turned from a problem of scarcity to one of plenty.

At least four states have asked Coal India Ltd (CIL), the near-monopolist producer, to curtail supplies to power plants, complaining excess fuel stocks are causing frequent fires.

The development comes at the back of an 11 per cent jump in CIL's supplies to power utilities in 2012-13. It comes as a breather for coal consumers, who had been grappling, with reduced fuel supplies pulling down efficiency of power stations and putting huge investments at risk.

"West Bengal, Gujarat, Rajasthan and Haryana have asked us to reduce supplies, saying stocks have exceeded normal levels," CIL Chairman S Narsing Rao told Business Standard. "This has been made possible by a 32 per cent jump in supplies to the power sector we managed in 2012-13. While West Bengal has formally written to us, other states have not." Coal consuming companies refuse to formalise requests for curtailing supplies, for fear they would invite penalties under the fuel supply agreement (FSA).

Business Standard analysed the latest Central Electricity Authority (CEA) data on coal stocks to counter-check Rao's claim. The data corroborated the surprising trend. The norm says a desirable stock is sufficient to last for 15 days. Those at the 14 power stations in West Bengal have touched a record high of 39 days. Three stations in Rajasthan - Kota, Suratgarh and Chhabra - have up to 20 days. Stocks at the five stations in Gujarat - Gandhinagar, Ukai, Sikka, Sabarmati and Wanakbori - have swelled up to 27 days. In Haryana, there is a 31-day stock.

This, however, does not mean the coal shortage for the power sector has been eliminated. What has happened is a sharp reduction in the number of power stations with a critical coal stock level, from almost half of all the country's power plants to less than a fourth. "I assure meeting 100 per cent demand from all state utilities which have valid power purchase agreements (PPAs ) with discoms this year. We will supply additional 32 mt coal to power utilities this financial year, too. Currently, only 15 stations have coal stock shortage. This is due to logistics issues," Rao said.

At the national level, 23 of the total 93 power stations (24 per cent) are critical (less than seven days stock), according to CEA. This is in stark contrast to the situation last September, when half of the 93 stations had turned critical, raising a furore over the coal crunch and leading to load-shedding across the country.

"West Bengal Power Development Corp has been burdened with excess coal for the last six months due to more than FSA dispatches from CIL subsidiaries Eastern Coalfields (ECL) and Bharat Coking Coalfields (BCCL). Our coal stocks have reached dangerously high levels," Chairman and Managing Director Barun Kumar Ray said in an April 4 letter to CIL Chairman Narsing Rao, asking for his immediate intervention to cut supplies.

The state government company has a generation capacity of 3,860 Mw. It has a monthly programme of buying 345,000 tonnes of coal, sourcing three (rail) rakes every day, from CIL under its FSA for five thermal stations - Kolaghat, Bakreshwar, Sagardighi, Bandel and Santaldih. However, the coal surge in the past few months has pushed up loading to 5.5 rakes a day, leading to a buildup of a massive 920,000 tonnes of stock at the five power plants.

"Excess receipt of coal from CIL has resulted in an unprecedented high level of coal stocks and spontaneous fires have already started at Kolaghat, Bakreshwar, Sagardighi and Bandel stations. I would request you to direct CIL subsidiaries to adhere to the (curtailed) plan till we consume a fair share of the stock and before the coal loses its calorific value," Ray told the CIL Chairman.

A senior official from Rajasthan's energy department confirmed the new trend. "It is a fact that our coal stocks, which used to remain at margins earlier, have increased significantly, particularly in the past three months," he told Business Standard, asking not to be named. Asked what could be the reason for this shift, he said, "CIL has increased supplies. Their own production has increased."

While Coal India might rejoice over the new trend of increased supplies leading to an unprecedented jump in stocks, logistical constraints, particularly, railway rake availability, will have to be eased if the trend has to be sustained.

Tags

Haryana Rajasthan Gujarat West Bengal Coal Coal India Limited Central Electricity Authority Eastern Coal Fields Bharat Coking Coal Fuel Supply Agreement CIL Power Electricity India

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