Don’t Cut Coal Buying, CIL Urges Power Plants

Don’t Cut Coal Buying, CIL Urges Power Plants

Coal India is urging its power producers to take a steady supply of coal even when their demand dwindles so that they are not faced with critical stock position when supplies are hit or demand for power rises.

Executives from Coal India have been asking each power plant to maintain stock levels that have been stipulated by the Central Electricity Authority for each plant. This varies from 15 days to 30 days, depending on the distance between the plant and its coal source.

“However, in an effort to bring down inventory costs, a large number of power companies reduced coal buying as they witnessed a fall in demand for power during March and April this year. Subsequently, May onwards demand for thermal power started to rise and they started burning more coal thus using up their inventory.

“Generators started asking for the coal that they did not lift earlier. However, monsoons led to flooding at a number of coal pits. Railway tracks were washed off and roads got flooded during the rainy season. Added to this has been the Railway’s decision to shut down the Chandrapura-Dhanbad railway line which has affected coal supplies to many power plants. Despite best efforts, we could not cater fully to their seasonal rise in demand,” said a senior Coal India executive.

Another Coal India executive handling liaison with railways said: “Indian Railways can send a certain number of rakes to each power plant. However, if a section of power companies suddenly start asking for more coal it would require sending them more rakes which may not always be possible as it would mean cutting down supplies to other plants because railways are mostly working full capacity.”

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Unable to receive additional coal from Coal India they started burning up their inventory and stocks started to fall.

“The situation deteriorated so much that a few plants were left with coal that would not run their plants for a full day. They were running their plant on a hand-to-mouth basis — on the basis of rakes they were receiving daily which hardly met a day’s requirement,” the executive said.

According to the Coal India executives, demand for coal rose due to a host of reasons.

This monsoon hydel generation was 13% less than last year increasing demand for thermal power. Thermal power generation rose by 13.36 billion units between April and July. Read more

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