Thread by @jamewils

#CoalCrisis

Reasons for coal shortage is mainly due to 3 reasons.

1. Huge Arrear outstanding against GENCOs
2. Single Window e-auction for non-linked domestic coal
3. Huge price of coal at international market due to Ukraine war

As per official PRAAPTI portal, the undisputed dues outstanding against GENCOS from the DISCOMS as of April 2022 had touched 1.068 lakh crores.

Many DISCOMS arrear is outstanding from 6 months to more than 12 months.

So cash flow to GENCOS throttled

So the GENCOS together owe around Rs.8000 crores to the Coal India Ltd.

Systematic constrains, unstainable subsidies, huge distribution losses & failure of regulatory regime to see DISCOMS run in a sustainable manner is affecting India's energy security.

Next cause is the single window coal auction window for non-linked coal brought for bringing parity of domestic & imported coal.

Steel & cement industries used this opportunity to get coal & resulted in high domestic prices, they can pass on to customers unlike power sector

This looks so good on at the policy level, but whether the regulators let DISCOMS to realise the increased cost is a million dollar question

Russia-Ukraine war made international coal prices shoot upto 150%.

Naturally GENCOS fully depending on imported coal closed their Plants (8 nos. 3041 MW).

Also the above mentioned reasons forced other GENCOS to curtail their coal intake

So as per latest coal report, out of 165 presently working & monitored coal plants (1,99,781 MW), more than 60% of having less than 25% of the normative coal stock, which are termed as "critical" as per the nomenclature used by CEA.

Out of the 165 Plants, 90 nos. with 1,18,999 MW has stock available for only 7 days to run the Plants at 85% their capacity.

They are getting replenished but the stock coming is not enough to create reserve but for a throttled daily generation on a day to day basis.

An important factor to understand is that though the coal fired thermal stations installed capacity is 51% of the total Installed capacity, they met 79% India's consumption demand in FY 2021-22 as per CEA data.

So without ensuring coal availability, our energy security in peril

What specifically happened in this April?

CEA data shown that this April seen a 13.6% consumption growth than last April. 28/04 seen daily consumption shoot upto 4322.48 MU.

Our peak demand touched an all time high of 2.07 lakh MW on 29/4 against 1.82 lakh MW last year.

Why this much power demand?

Central & North-West India was hit by one of the severest heat wave, an unusual for April.

We had hit with one of the hottest April for 122 years as per IMD.

So along with low inventory & sudden demand made power sector faced it's worst crisis

Now Union Power Ministry nudging GENCOS to get imported coal and at least have 10% of the usage to imported coal while present stock of imported coal is limited to 3% of the total normative stock required.

Big question is who is going to burn their fingers by high cost imported coal when there is no assurance that their dues are paid & they can have a sustainable business model?

If there is record coal production & enough coal is available, why we need imports when price are high?

Is it a problem of mere logistics or failure to anticipate and advance planning when there are enough protent about what in store for us?

The issues are deep rooted and need to be addressed in a systematic manner, rather than engaging in blame games

When the country is slowly recovering from the turmoil due to COVID lockdowns, whether our growth will be hampered due to a deepening crisis in the power sector?

Are we going ahead with band-aid solutions to cover up the festering deep wound?