State-run miner Coal India Ltd’s struggle to cater to the requirements of the non-power sector continued as elevated power demand further dented its supplies during April 2022.
Dispatches to the non-power sector hit a new low, decreasing 35% y-o-y to 7.78 million tonnes (mnt) in April 2022 against 11.93 mnt in April 2021. Notably, this was the lowest monthly volume recorded since April 2020 when dispatches had fallen to 7.11 mnt.
In sharp contrast, the miner had dispatched 49.72 mnt of coal to the power plants in April 2022, registering a growth of 17% y-o-y driven by the soaring temperatures in mid-summer.
Supply cut imposed
The non-power sector predominantly consists of cement, sponge iron, captive power plants and a host of other industries, which are accorded preference next to the merchant power plants in terms of coal supplies.
Indicating robust demand, the country has been on a record-breaking streak in terms of power consumption.
Highest demand met was recorded at 201 gigawatts (GW) on 26 April, surpassing the previous year’s peak of 200.53 GW on 7 July, 2021. The maximum demand again rose to 204.65 GW on 28 April and peaked to a new high of 207.11 GW on 29 April, as per the Union power ministry data.
This kept coal demand from the power plants elevated, whose inventory levels began to decline at a faster rate.
In order to support these plants, the CIL subsidiaries had significantly reduced their offerings via auctions. In fact, the total volume put up for sale was decreased 80% m-o-m to 1.6 mnt in April 2022, where only four subsidiaries had participated.
Adding to the woes, coal dispatches to the non-power sector were also curtailed against the monthly scheduled quantity offered under the fuel supply agreements (FSAs).
Captive power plants hit worse by supply disparity
The curtailment in domestic coal supply has put the non-power sector in a tight spot as soaring prices in the global markets have also limited sourcing via imports.
In particular, the condition at captive power units was more critical, as their dispatches were reduced almost to half during April 2022.
CIL coal dispatch to non-power sector
Source: Coal Ministry | Quantity in mnt
The non-power sector usually plans for its fuel requirements well in advance, but due to the shortfall in supply they are facing an uphill task in continuing their operations. The ongoing situation is expected to continue into the near term with power demand still going strong in the summer season.
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