Indian captive power plants running at half capacity due to coal shortage

Coal mine in Dhanbad, India. Photo by Nitin Kirloskar, Wikimedia Commons.

The Indian Captive Power Producers Association or ICPPA held a press conference on Thursday where its president, Rahul Sharma, denounced that most captive power producers are getting half of the coal they need from state-owned Coal India and are considering increasing their imports.

The scarcity of the mineral is due to the government’s decision to divert most of the country’s output to electricity generators in order to prevent outages. Coal India’s shipments to power plants rose 9.2 per cent to 290.6 million tonnes in the eight months ended November 30, 2017. This accounted for 79 per cent of the overall supplies of 368 million tonnes during the period. Local reports state that India’s thermal power capacity of 137 GW requires about 1.43 million tonnes of coal daily and, despite the increased supply, power plants currently have enough stock for eight days, when they are required to pile up 21 days worth of coal.

Given this situation, the public company is trying to engage states and the Central Electricity Authority in an assessment process that would provide a clearer picture of each region’s revised power demand for the next three years. Coal India’s goal is to use this information to do a more efficient job dealing with increasing demand.

But power plants that distribute electricity to the population are not Coal India’s only clients. The firm, which generates more than 80% of the country’s coal, is also in charge of supplying the mineral to ICPPA member-companies who generally produce electricity for their own use.

Chemical factories and aluminum smelters are among the latter and, according to the aforementioned Rahul Sharma, the local shortage is pushing them to make costlier overseas purchases, which has increased their power costs by 50 per cent.

Thermal coal at the Australian port of Newcastle, which is an Asia-Pacific benchmark, is trading near $100 a tonne after gaining about 17% in the financial year that started in April, Bloomberg reports.

High costs combined with reduced power generation is rendering operations economically unviable with huge risk of plant closure, Sharma and his team said at today’s event. The ICPPA requested urgent government intervention in this matter.