Coal India Ltd (CIL) has reported a remarkable growth in production in Aug’21, supported by requirements from the power plants reeling under the pressure of steady decline in stock levels.
Coal production from the company increased by 15% y-o-y to 42.6 million tonnes (mn t) in Aug’21 against 37.17 mn t in Aug’20, recording the highest y-o-y growth for a particular month in this fiscal.
Interestingly, this is the first time when production has crossed the 40-mn t-mark in August over the past seven fiscals, which indicates concentrated efforts of the company to meet rising demand despite the challenges posed due to monsoons.
The company also raked higher coal dispatches which grew 10% y-o-y to 48.73 mn t in Aug’21 against 44.34 mn t in Aug’20, but marked 4% m-o-m drop compared to 50.59 mn t in Jul’21.
Nonetheless, thermal plants in the country are still facing acute coal shortage, primarily due to an uptick in electricity demand. However, there are various other factors which led to this fiasco.
The curious case of coal shortage
The power ministry, in its statement, had accounted for lesser generation from hydro power plants for the coal shortage as the shortfall in power supply was being met by coal-based power generation.
However, it may be noted that this situation should have been avoided at a time when CIL had commenced the fiscal with a surplus inventory of 99 mn t.
Instead of restocking their inventories with the available coal, the power producers preferred the bare minimum coal volume to run their plants in the current fiscal where electricity demand has been mostly vacillating.
Consequently, inventory levels of power plants exhausted when there was a sudden rise in power demand. As on 30 Aug’21, coal stocks at power plants fell to a fresh low of 12.96 mn t, sufficient for seven days of power generation.
Some of the blame can also be accounted to CIL as it had blocked coal supplies of those plants which had not cleared their dues.
Outlook
The new committee constituted to regulate coal supply to the plants is working rigorously to raise coal inventory levels by implementing a series of measures to avoid shortfall in electricity supply.
On the coal supply side, CIL is more than capable of raising the same for these plants as evident from the fact that it had clocked supplies to the tune of 1.7 mn t per day during the last five days of Aug’21, which was certainly higher than the average supply of 1.57 mn t per day recorded for the whole month.
With an excess stock of 49.65 mn t reported at the end of Aug’21, the company is expected to pull the power plants out of criticality.
However, in the short-term, the supply crunch is expected to persist with the non-power sector facing the heat since it always gets second preference when it comes to coal supplies compared to the power sector.
At the same time, the prospect of rising imports is also on the cards as the end-users would seek alternatives to run their plants.
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