Why Availability Of Coal At Plants Has Been Hit, IIFL Explains

Why Availability Of Coal At Plants Has Been Hit, IIFL Explains

Coal India (CIL) reported 7% growth in coal supply to the power sector during FY18; yet, coal stocks at operational thermal power plants have remained low at only 10 days of requirement. Importantly, the number of plants with critical-level coal stock has zoomed to 28 as of Mar-2018, with distant plants in western and northern India witnessing greater shortage. This is driven by logistics constraints and not by lower production at CIL. Shift to roads and MGR for near pithead plants (to make rail capacity available for distant plants) along with ongoing investments in rail projects would help. But shortage at power plants may continue in the interim, especially if demand growth sustains. Also CIL’s offtake growth can remain healthy subject to logistic constraints as power plants build up inventory.

Inventories at major power plants still low

While coal inventories with top 114 power plants in India has increased to 10 days (16.2mt) now from the low of six days in Sep/Oct-2017, it is still low compared with 19 days at end-FY17 and 27 days at end-FY16. Despite CEA’s guideline of maintaining stock of 32mt or 22 days, thermal power plants ran down inventories to 11-12 days of requirement over last summer. This was before the sudden demand surge which created significant shortage at multiple power plants, given constraints to ramp up coal production during monsoons. Read More

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