India’s power plants have reported a steep fall in coal inventory levels as increased electricity demand due to the average monsoon has taken a toll on the power producers who have been reluctant to lift additional coal.
As on 23 Aug’21, coal stock levels at plants (having coal linkages) have fallen to 15 milllion tonnes (mn t), sufficient for only eight days of power generation. Notably, these inventory levels were last seen in Nov’18 when coal stocks had declined to 12.94 mn t.
Power producers have preferred the bare minimum coal volume to run their plants’ in the current fiscal where electricity demand has been mostly vacillating.
Domestic coal miner Coal India Ltd (CIL) has registered a robust 32% y-o-y growth in coal supply to the power sector at 166.96 mn t during the first four months of FY’22. But this growth came against a weak base period when demand had been drastically reduced due to Covid last year.
In fact, CIL’s coal supplies have fallen to a three-month low of 38.99 mn t in Jul’21, as per data provided by the power ministry.
Besides, subdued demand was also recorded in the auctions where out of the 26.425 mn t of coal offered for sale under the special forward auction scheme during the four-month period, only 10.964 mn t was sold.
Consequently, with electricity demand gaining momentum, coal stock levels have further depleted.
Data provided by the Power System Operation Corporation (POSOCO) shows that electricity consumption has continued to uptrend in Aug’21 as average power supply was registered at 4,182 million units (MU) during 1-23 Aug’21, rising marginally against 4,123 MU in 1-23 Jul’21.
Private generators to come under scrutiny?
Mahanadi Coalfields Ltd (MCL) has offered coal supply beyond the monthly scheduled quantity (MSQ) to the government-run power houses having less than or equal to 10 days’ coal stock through road/rail mode.
The coal has been offered from sources namely Hingula, Balram, Bharatpur, Lakhanpur and Garjanbahal on ‘as is where is’ basis. Further, sized coal under 250 mm from Ananta and Jagannath has also been offered.
However, no such provision has been made to the private power generators who are considered last in line for coal supply behind the government-run power plants.
Critical Stock Level at Power Plants
Break-up of plants having stock levels less than or equal to 10 days indicates that a total of 26 private power plants are at risk of shortage in coal supply and would probably seek costlier imports in case their requirement is not met domestically.
Moreover, improved participation in the special forward auction earmarked for power producers is also on the cards as these plants will look to replenish their stock levels.
Upcoming auctions
To mitigate the supply crunch, two special forwards auctions are in the pipeline which are scheduled for this month.
Eastern Coalfields Ltd (ECL) has offered a minimum volume of 100,000 tonnes of coal, whereas that by MCL will feature bulk sale of 9,200,000 t. Both these auctions will be held on 31 Aug’21.
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