KOLKATA (miningweekly.com) – The Indian government has directed coal companies to make preferential allotment of coal to government-owned thermal power companies, skewing distribution of dry fuel to the detriment of other industries, like cement, steel and captive power plants.

The government order from the Coal Ministry to Coal India Limited (CIL) and Singareni Collieries Company Limited directs the miners to make “out of turn allotment” of coal to thermal power companies operated by central or state governments.

The order states that the decision was taken in view of April’s power generation being more than the “programmed generation”, which is expected to lead to higher demand for coal. The order indicates the government’s apprehension that a coal shortage is likely to aggravate further as summer temperatures rise and demand for electricity increases.

In fact, some wholly owned mining subsidiaries of CIL have stopped supplying captive power plants of several industries and are prioritising coal supplies to government thermal power plants.

The order has attracted flak from several coal-user industries, which fear that preferential coal distribution will impact on the volumes available to their operations.

At the same time, thermal power companies too fear that coal supplies to their plants, which are already operating at low plant load factor of about 55%, will be hit by a fuel shortage.

“Discrimination based on ownership of assets puts into question the sanctity of commercial contracts signed with Coal India Limited. This will lead to more stress for bankers funding thermal projects. This is against the Prime Minister’s stated policy of a level playing field and ease of doing business,” private power companies representative body, the Association of Power Producers director-general Ashok Khurana said in a statement.

As reported earlier by Mining Weekly Online, private and public thermal power plants are facing an acute shortage of coal.

According to data sourced from Central Electricity Authority (CEA), on April 22, thermal power plants with aggregating generation capacity of 14 0065 MW had coal stocks of 15.006-million tons, equivalent to about nine-days’ consumption, against a normative stock requirement of 22 days set by the CEA.

Of these, four thermal power plants were carrying stocks equivalent to less than seven days' consumption, categorised as “critical stock”, while another 17 thermal power plants had stocks for less than four days’ consumption, categorised as “super critical”.