KOLKATA (miningweekly.com) – Passing strident strictures on Coal India Limited (CIL) for failing to effectively review production and supplies, the Coal Ministry has directed the miner to immediately start liquidating coal stockpiles to mitigate shortages at power plants across the country.
The Coal Ministry, in a rare, strongly worded rebuke of the miner, said that despite the end of the rainy season and despite repeated reminders, CIL had not been able to step up production or offtake to desired levels.
In the communication, the Ministry directly blamed CIL’s top management for not regularly monitoring production planning, mine production and supplies to thermal power plants, which had led to a steady fall in fuel stocks at thermal power plant sites, far below the normative stock levels determined by the Central Electricity Authority.
According to data sourced from the Power Ministry, coal stocks at thermal power plants this month had fallen to ten days consumption, with at least ten thermal power plants having nil coal stocks, against a normative stock level of 25 day consumption equivalent.
Under the circumstances, the Ministry has directed that CIL take immediate steps to increase supplies by liquidating at least ten-million tons of coal by the end of October, from its existing stockpile estimated to be between 25-million tons and 30-million tons.
The Ministry expressed concern over the fact that while power plants were starved of dry fuel with some even being forced to shut generation, CIL was carrying large coal stockpiles that could be liquidated through more efficient offtake and logistical management, even if the miner was unable to step up production in the short term.
Officials said that consultations were held last week between the coal and power Ministries over concern at the rising price of electricity in the spot market and falling plant utilisation factor of thermal plants at a time when demand for electricity was set to rise, with the string of festivals across the country over the next month.
Putting the onus on CIL, the Coal Ministry said that besides a lack of efficient review, CIL management was also found lacking regarding management of key projects, such as coal handling plants, and delays in floating tenders for the construction of such projects. It suggested that CIL take immediate steps including financial penalties in cases where contractors were found responsible for time and cost over-runs in completing key coal infrastructure projects.
However, key Ministry officials said that neither the government, nor the miner had many options to tackle the situation besides looking at stockpile liquidation to mitigate the supply shortage to the power sector.
Acknowledging that stockpile liquidation could only be a one-off short-term measure since CIL was not in a position to increase production over the next few months, the government was reconciling to the fact that thermal coal imports would increase over the rest of current financial year.
In view of current domestic coal availability, a section of analysts have revised the coal import forecast upwards to about 164-million tons by the end of current financial year, against an earlier estimate of 158-million tons at the start of 2018/19.