Coal India subsidiary, Mahanadi Coalfields Ltd. (MCL), has decided to continue with curtailment in coal supply to the non-power sector at a time demand from thermal power plants is showing no signs of slowing down.
The miner has informed that coal allotment to the non-power sector under fuel supply agreements (FSAs) would remain at trigger level for June 2022. This means that consumers availing this facility would receive coal at minimum commitment against their monthly scheduled quantity – a provision that has been kept in place since February this year.
The measure has been taken to aid the coal-fired power plants facing critical coal inventories. These plants took a breather as their inventories increased to 24.03 million tonnes (mnt) as on 9 June recovering from the lows in April.
However, the stock level has stayed below 30 mnt since July 2021, thereby requiring the coal companies to step up their supplies to these plants.
Disparity in coal supply
MCL’s coal loading to the non-power sector via rail fell to a new low of 4.1 rakes/day in May this year from 18.3 rakes/day in May 2021.
On the other hand, loading to the power sector increased 5% m-o-m to 93.4 rakes/day in May which was also 16% higher on the year.
Buyers rush to procure coal in auctions
With the curtailment in place for FSA sales, the buyers turned to e-auctions to meet their additional demand.
Indicating robust demand, the entire volume of 2.2 mnt of coal was booked at a bid premium of 749% in MCL’s auction, which was the highest among the subsidiaries that had conducted auctions in May.
This trend is expected to continue driven by soaring power demand. The Power Ministry has stated that all-India power demand that was met rose to a new high of 211.856 gigawatts (GW) as on 10 June after it had peaked to 210.793 GW the day before.
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