Prioritisation of coal supplies for the power sector have led to rising input costs for the aluminium, steel and cement sectors and may lead to prolonged shutdowns at some plants, according to experts.
Industry associations have written to the Coal Ministry requesting a resumption of normal supply to non-power sector consumers of coal as inventory at thermal power plants which had fallen to four days of stock in October has improved to 11 days of stock. Since July, the Centre has directed Coal India Ltd (CIL), India’s largest supplier of coal, to prioritise supply to thermal power plants, sharply reducing the supply of the dry fuel to non-power sector players, according to industry sources.
Low coal stocks at thermal power plants forced many states including Uttar Pradesh, Rajasthan and Punjab to impose load shedding in October, as states rushed to power exchanges paying three-four times normal rates for power due to inadequate supply.
“The situation is very serious for non-power sector consumers and there doesn’t seem to be a resolution in sight,” said an expert who did not wish to be quoted.
Aluminium, steel and cement sectors utilise domestic coal to generate power at captive power plants to run operations. Such sectors are being forced to use purchase expensive imported coal as well as draw more expensive power from the grid due to low coal supplies. Aluminium plants in particular have raised concerns about coal supply as even a two-hour interruption in power supply at such plants could lead to prolonged shutdowns before they can come back online.
An industry source aware of developments said, “The requirement for non-power coal consumers is about 45-50 rakes of coal daily and the supply fell to about 27 rakes in October and improved to 33-34 rakes in November, but has fallen again due to prioritisation for the power sector.”