KOLKATA (miningweekly.com) – Captive thermal power plants in India are facing coal supply shortages, as a result of constraints in the availability of railway wagons to transport the coal.

Not officially acknowledging any shortage of coal and instead blaming distribution bottlenecks for the supply challenges, the country’s Power Ministry has decided to prioritise the allocation of railway wagons for transporting coal to thermal power plants that have power purchase agreements with distribution companies.

This is aimed at avoiding disruptions in electricity supplies to consumers and households.

Next in line for the allocation of railway wagons are plants operated by independent power producers that sell their electricity in the spot market, which enables distribution companies to balance short-term mismatches in demand and supply.

Captive power plants are last in line in terms of wagon allocation by Indian Railways.

The prioritisation of allocation of railway wagons has been instituted in joint consultations between the ministries of Power, Railways and Coal.

Captive power plant operators claim this has resulted in coal received by them having fallen to about 40% of contracted volumes.

For example, aluminium refiners, whose power costs constitute about 40% of cost of production and who are heavily dependent on their captive thermal power plants, say they received only 40-million tons of dry fuel during 2017/18 against a total requirement of 63-million tons.

The aggregate installed captive power plant capacity of all domestic aluminium companies in India is around 9 500 MW.

Even State-run National Aluminium Company Limited, which operates a 1 200 MW captive power plant at its smelter at Angul, in Odisha, has communicated to the ministries of Coal and Power that is is facing a coal supply “crisis”, with the aluminium company saying it is being “starved” of transportation logistics.

The shortage of coal has forced the government aluminium company to draw electricity from the grid, which is more expensive than the cost of producing electricity at its own captive plant.