KOLKATA (miningweekly.com) - India’s independent power producers (IPPs) have flayed State-run Coal India Limited’s (CIL) move to push higher sales through e-auctions forcing thermal power plants without fuel linkages to resort to high cost dry fuel imports.

However, simultaneously, the Power Ministry has asked all thermal power plants operated by IPPs that do not have fuel supply agreements with domestic coal miners to review their coal requirements and look at import options as the government anticipated further tightening of domestic supplies from end-August, in view of the monsoon rains across the country.

In a communication to the government, IPPs said that while thermal power plants operated by them received only 75% of their coal requirement, outside any fuel supply agreement with coal companies, CIL was increasing sales volumes through e-auction, solely to maximize revenue realisations and pushing power producers towards higher import volumes.

It has been pointed out by IPPs that during 2017/18, CIL supplied 528-million tonnes of coal through fuel supply agreements, leaving a shortfall in demand of about 104-million tonnes of the dry fuel; but, the miner offered 31-million tonnes through e-auction sales, which was expected to more than double in the current financial year.

Industry estimates that CIL was able to increase sale revenues by over 80% through e-auction sales compared to the selling price under negotiated fuel supply agreements.

According to data sourced from Indian Ports Association (IPA), major ports in the country recorded a 19% increase in inward shipments of thermal coal at 28.88-million tonnes during the first quarter of 2018/19 (April to June) compared with the corresponding quarter of the previous financial year.

The supply situation has been further aggravated by the fact that production from captive coal mines operated by thermal power companies recorded dismal growth, and these power companies were also relying on merchant purchase of coal from domestic coal companies to meet their rising fuel demand.

Government data showed that captive coal mine production increased from 32.55-million tonnes in 2015/16 to just 34.75-million tonnes in 2017/18.

Officials in IPPs pointed out that it was surprising that the government was pushing private power producers towards imports at a time when CIL was sitting on an inventory of around 55-million tonnes and pushing higher volumes through e-auctions.

CIL for its part has blamed lack of investment commitments by thermal power companies in ramping up production from their captive coal blocks.

The government miner claimed that pithead-based thermal power plants were not facing any shortage of coal supplies. Even though CIL was carrying large stocks of coal, non-pithead power plants were facing shortages of coal not because of supply constraints but owing to logistics and transportation logjams in carrying fuel from CIL mines to thermal power plant locations.