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Keeping coal supplies on track

At the beginning of this financial year, the coal sector reported a stock of 69.17 million tonnes, although many of the power stations were listed as 'critical' and 'super critical' by the Central Electricity Authority; holding a stock of only 7 days and 4 days consumption, respectively. The norm for coal stocks at the power plants is at least for 15 days of consumption. Stocks at 35 power stations are still critical, with 26 of them on the super critical list as on October 6, 2011 (accessed on October 12, 2011). Many of the power plants have been backed down and there is a shortage of electricity resulting in severe power cuts in many states, including Delhi.

The ministry of coal and Coal India Ltd (CIL) blamed Indian Railways (IR) for failing to supply enough coal rakes for loading. IR suggested that CIL was unable to move enough coal from the mines to the railhead for loading into the wagons. IR also pointed out the large variation in the demand of coal rakes, ranging from a low of 140 to a high of 180 per day, which was difficult to manage. The ministry of power played the victim and wanted both IR and CIL to cooperate so that enough electricity could be produced. The ministry of power further suggested that the e-auction be stopped and coal earmarked for e-auction be diverted the to power sector. Obviously, the ministry of coal refused to comply, e-auction being the major source of earning in a situation of stagnant production of the coal major.

In the last four decades, the share of coal production from opencast mines has increased to over 90%. A majority of these mines are located in the eastern and central part of the country where the monsoon is very active during the months of May-September. The flooding of open-pit mines and stoppage of coal production is a common phenomenon every monsoon; this year being no exception. Also, due to poor road conditions in the coal mines, especially in the monsoon, coal transport from the mines to the railhead takes a beating. The delay in renewal of road transport contracts is another reason for the shortfall.

As a result, there is a sharp declining trend in production in the first quarter reaching the lowest level in the second quarter. The dip in production until August this year is reported to be 2.64%.This fall is attributed to high temperatures in April-May and flooding of mines due to heavy rains in June-September; both posing problems for coal production from open-pit mines. In the interim, the accumulated coal stock of the preceding year is dispatched to meet the shortfall in production. After September, the production starts a steady increase in the third and fourth quarters reaching a new peak by March-end; leaving behind increasingly larger stocks to be utilised to meet the shortfall next fiscal.

The closing stock (this year's peak), as on March 3, 2011, was 69.17 million tonnes, up from last year's stock of 64 million tonnes. As the months progressed, the stock got depleted and came down to 47.69 million tonnes in mid-September. It is likely to fall further and would again show a rising trend when the production picks up after the rains stop and the festive season is over.

The increasing trend of coal stocks is a regular phenomenon. However, in the past, the closing stock of raw coal has been 10% of production, which has now increased to 13% in 2010-11. Increased coal production from mines without railhead; essentially from road-linked mines could be one of the reasons.

In the existing scheme of things, if enough accumulation of coal stocks does not happen in March every year, there will be much more exacerbated shortages and many of the power plants may have to be closed for the first two quarters every year.

It is clear that due to the total shift to opencast mining, combined with inherent inefficiencies built in the coal PSU, CIL is unable to reduce the high fluctuation in coal production and dispatch during the year. The shortages of rolling stocks and the bureaucratic set-up of IR is also a contributing factor to the problem. The inability of the power sector to assert its right as the major consumer of domestic coal is obvious because of the absolute monopoly of the coal supplier.

Instead of putting blame on each other year after year, these three highly inter-dependent sectors must jointly devise ways and means for smoothing the coal production/dispatch curve to ensure a uniform supply to the power stations.

Tags: power stations, Indian Railways, coal supply, coal production, Coal India Ltd

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