COAL SUPPLY FALLS; WILL POWER SUPPLY TRIP TOO?

By Ruma Dubey

The Central Electricity Authority (CEA) put out its regular report on coal supplies and pressed the panic button – of the 100 thermal power stations spread across India, as at 3rd Sept 2014, 56 plants face a ‘critical’ coal shortage of less than 7 days of coal supply, of which 28 plants are ‘super critical’, meaning coal supply of less than 4 days.  We are already on 9th Sept, meaning some of these 28 plants could have actually shut due to coal shortage.

Man created this mess but some solace came from Nature. Torrential rains across Eastern and Northern India reduced demand for power during peak hours, bringing down the demand to almost half at 4,851 MW.

But rains will go and demand for power will once again surge. What happens then? Current power capacity facing critical shortage is over 40,000 MW. Just to get an understanding of how politics and indecisiveness has marred this sector – total installed capacity of thermal power is 149 GW. Due to coal shortages, over the past several years, operates at a plant loading factor (PLF) of 69% only. This means, what we get is 100 GW of power. If coal was produced as per target, with proper linkages to these plants, plants could operate at PLF of 90%. Currently, these 100 thermal plants get 720 million tonne of coal, domestically produced and imported. To read 90% PLF, India would need another 165 million tonne.

In the midst of all this, where we can clearly see that the problem is more systemic than endemic, Piyush Goyal, the minister for power, coal and renewable energy tried to convey that there was nothing really to worry, all was well. He turned around this shortage of coal as a consequence of higher efficiency – he said that more electricity was being generated and this sudden spike up in production has led to shortage. He said that while production went up over 20% between June and August, coal supply rose by just 5 to 6%.

This means, yes, more electricity was produced but the problem, whether it is due to efficient production or inefficient management, continues to remain. Goyal went on to talk about measures which could help ease the woes of the power sector – quicker environmental nods for new coal/ power projects, bring in more new trains to transport more coal and toughest of all – fix the inefficient government system that determines which mines supply which power plants.

These sound good and are most certainly in the right direction but all these are long term plans – we are looking at 2017 and 2019. What about the short term?

Well, there are no quick fixes here, no short term band-aids. The most obvious thing which will happen now is that power cuts will continue across India, except the privileged areas of VVIPs across India. Power will be rationed out to states, ensuring that none overdraw on their schedule. The Northern Region Load Despatch Centre has already issued a warning that UP, Rajasthan and J&K were overdrawing.

Adding to the crisis is the shut down at Mundra. Adani Power's 4,620 MW thermal power plant and Tata Power's 4,000 MW ultra mega power project both at Mundra, Gujarat supply power to Rajasthan, Maharashtra, Gujarat, Punjab and Haryana. Last Monday, the Supreme Court had stayed the Appellate Tribunal for Electricity's interim order allowing compensatory tariffs for the two Mundra projects.  

Coal India, which supplies 80% of coal in India is a stickler when it comes to missing its production targets.  From April to August 2014, as against a target of 183.44 MT production of coal, it produced 175.88 MT. And in FY14, it produced 462 MT v/s target of 482 MT. Thus consistency in missing targets remains. And this, perceptibly, is the crux of the problem – lower supply when demand is so high.

And to top it all off, distribution companies collect less than three fourth of the payment for the electricity which they distribute. No surprise then that discoms across India have an accumulated loss of more than Rs.25,000 crore as on 31st March 2014. Now this is just another part of the pie which has gone bad.

Modi Govt has promised uninterrupted power supply all over India by 2019. But for now, there seems no light at the end of this dark tunnel. Let’s get ready to sweat it out.

For details into the coal shortage report: http://www.cea.nic.in/reports/daily/coal_stock/coal_14_09_03.pdf