Coal India Ltd (CIL) has not managed to capitalize from the recent surges in electricity consumption, as power companies continue to defer coal supplies due to the excessive coal inventories.
Dispatch to the power sector recorded a modest growth from 40.25 mn t in Dec ’20 to 40.63 mn t in Jan ’21. However, the volume extended its fall on y-o-y basis for second successive month as it fell 7% from 43.64 mn t in Jan ’20.
This comes at a time when country’s daily power demand had been on a record-breaking trend with economic activity picking up pace again.
Electricity consumption hit a new high of 189.6 GW (gigawatts) on 30 Jan ’21, surpassing the previous high of 188.4 GW recorded on 28 Jan ’21. Earlier, the previous milestone was breached by touching 187.3 GW on 22 Jan and 185.82 GW on 20 Jan.
Power Plants’ Lack of Interest
Efforts made to meet the fuel requirements of power sector resulted in excessive build-up of coal inventory at the power houses last year. The situation got worsened during the lock-down when coal-fired power generation was vastly affected by the closure of industrial units.
Notably, coal stock assessed at the plants had reached 51 mn t as on Jul ’20, sufficient for 30-34 days of power generation.
Moreover, dearth of cash-flow from DISCOMs has led to high outstanding amount payable to these generation companies thus forcing them to regulate coal supplies. Consequently, CIL’s overall coal dispatch to power sector has decreased 6% y-o-y to 357.54 mn t during the first 10 months of this fiscal (Apr -Jan period).
Bright Light Ahead
Rise in coal consumption at power plants has induced a steady decline in coal stock levels. After a continuous growth recorded between Oct-Dec period, stock levels have begun to deplete at a faster rate.
As on 21 Feb ’21, coal inventories at plants were assessed at 32.59 mn t, sufficient for 18 days of power generation.
Encouraged by the higher demand, fresh schedule for power generation are expected to keep coal burn-rate elevated, at the same time mandate to maintain 19 days of stock would push power plants to take higher coal supplies.
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