Given that the Union’s energy minister, RK Singh, expects the coal shortage problem to persist for up to six months, it is better that the government is looking to increase imports. In April last year, the government decided to reduce coal imports, but power plants can now use up to 10% of imported coal. That’s an expensive proposition, but the extra supply will come in handy. Meanwhile, it makes sense to redirect coal stocks to states where supplies are dwindling. Stocks have been depleted in more than 100 thermal power plants. In the last 10 days, approximately 140 GW of capacity has been running on coal reserves for six days or less; Typically these plants would have an inventory for 15 days to a month.
With a strong increase in electricity demand, coal consumption increased by 18% in August-September compared to the comparable period of 2019. Unfortunately, heavy rains in September affected mining activity and, to overcome the shortage, it would take imports. Coal India Limited (CIL) has confirmed that coal shipments will increase after the Dusshera festival later this week to 1.6 million tonnes per day. But it needs to increase production and productivity in the coming years to be able to meet the increasing consumption of electricity. Production increased by only 6% year-on-year in the first half of 2002. There were clear indications that energy demand was increasing, after the first quarter recorded year-on-year growth of more than 16%, and CIL needed to be better prepared, since it supplies approximately 80% of the needs of thermal power plants.
While supplies are tight, it is true that several states lack funds and cannot afford coal supplies. In fact, part of the crisis can be traced back to agonizing state disturbances, the weakest link in the electricity chain. The hassles have been late or defaulted on payments, leaving the gencos in trouble. For years they have gotten away with not paying, but now CIL has started cutting off supply to state power plants whose fees are high. Supplies to state generators have been reduced in Uttar Pradesh with a capacity of 5.5 GW, in Andhra Pradesh with a capacity of 5 GW and in West Bengal (3.4 GW). In addition, Rajasthan has also seen the supply of coal regulated by 2.7 GW of state generation capacity due to unpaid bills. States that owe money to coal companies also include Tamil Nadu and Madhya Pradesh. In fact, in a recent interview with a television channel, the Union’s energy secretary, Alok Kumar, had observed that supplies would also depend on timely payments to coal producers. Kumar said they had become clear about the discomforts they needed to get in shape and pay off their debts to the gencos, otherwise they will be in a bind. That blow on the knuckles is well deserved; For too long the nuisances have been gotten away with criminal behavior. CIL’s accounts receivable had risen to just under Rs 20 billion in March 2021 before falling to Rs 17.1 billion at the end of July. Recently, the Ministry of Energy invoked the rarely used Tripartite Agreements (TPA) against Jharkhand, Karnataka and Tamil Nadu to recover energy supply quotas for their nuisance to NTPC and others. Meanwhile, CIL also needs to cheer up; It would be a shame if the recovery of the economy stopped due to power shortages. In the long term, India must work to generate more electricity from clean fuels.