Power demand in the nation touched a file of 203 Gw on Thursday on the again of an intense heatwave and the reopening of the economic system. This comes at a time when the Centre is pushing for imported coal–after having shunned it for a number of years–in the wake of a scarcity in the home market.
But this has stretched the entire provide chain, which is having to take care of a value of Rs 10,000 per tonne of the fossil gas. At one finish of the chain, the state-owned power distribution corporations (discoms) proceed to be financially distressed, and never in favour of coal imports. At the opposite finish, home coal availability and provide is beneath stress, and in the center of all this, Rail infrastructure is unfold skinny.
Grand previous mismatch drawback
Close to 81 per cent of India’s operational coal-based power era capability is located away from the mines (500 km and above). While ideally, most thermal power era in any nation needs to be nearer to mines, it’s precisely the other in India, mentioned a Delhi-based sector analyst. “Be it political obligation or private investment, there’s hardly any rationale for a power plant situated 500-1,000 km away from coal mines,” he mentioned.
The fallout of this example was felt by Indian Railways this yr, when it had to cancel passenger trains simply to make approach for extra coal to transfer from the Eastern coal bearing states in the direction of crops in the North and East.
Over a span of 26 days, the nationwide transporter cancelled 1,053 prepare journeys unfold over 42 trains, largely in the South East Central Railway zone. The hanging side was that regardless of releasing of tracks, delays in loading and longer transportation occasions ensured that the provision wasn’t augmented to its optimum.
Average lead is the gap that every tonne of freight has been transported. Through mixed efforts of stakeholder ministries, the common lead of coal for TPPs had fallen from over 708 km in 2011-12 to 496 km in 2016-17, mentioned officers. But the development reversed shortly as demand went up, with common lead for coal freight in May additionally noticed a rise, reaching 554 km as in opposition to the 517 km in the earlier yr.
“This year, as power demand increased, Railways had to supply more coal to faraway power plants since only plants near pitheads were not enough to meet the power demand, which is why our average lead this month increased. Ideally, we’d also want shorter leads since longer ones would mean that our wagon turn round (WTR) would be higher,” a railways official mentioned.
Owing to observe congestion and delays, the present common pace of freight trains is eighteen.8 km/h (together with stabling and yarding time). The low freight pace doesn’t assist in a power disaster if TPPs are located distant from coal mines.
Acute stress of Discoms and coal mining woes
National miner Coal India Limited (CIL), the most important provider of dry gas in the nation, has been beneath criticism for the reason that disaster broke out. Despite elevated manufacturing, lack of correct demand forecast coupled with cost delays from discoms precipitated stress on the provision line.
The development in home coal manufacturing by CIL was subdued over the previous 5 years with a CAGR of two.4 per cent, mentioned Sabyasachi Majumdar, Senior Vice President, Icra restricted.
He mentioned whereas the home coal provide to the power sector did enhance by 25 per cent in FY2022 on a YoY foundation, the inventory ranges at thermal items proceed to stay low at 8-9 days over the previous six months.
“There is a mix of reasons including sharp growth in electricity demand, subdued utilisation of the imported coal-based projects due to the prevailing high international coal prices given their inability to pass on the higher fuel costs under the PPAs,” Majumdar mentioned.
Imported coal-based crops totalling 17 Gw are shut in the nation, thereby rising the demand stress on home coal-based items. Icra mentioned coal imports by power utilities decreased by 40.6 per cent on a YoY foundation in FY2022.
In the center of this, the union power ministry directed CIL to import coal, even because the coal ministry continues to declare, there’s sufficient home provide. But as in opposition to the estimated demand of 38-40 MT from state and personal gencos for mixing, the full demand acquired by the CIL is 2.4 MT. For subsequent yr, CIL has positioned a young for importing 6 MT for constructing a inventory to meet any exigency, mentioned CIL executives.
The sole motive for not many states displaying curiosity in imported coal is the price. At 10,000/tonne, imported coal is 5 occasions costlier than CIL coal. Central government-owned NTPC which is in the method of issuing tenders price 20 MT, will see the power tariff from its items go up by a minimum of 50-70 paise. This can have to be borne by shoppers.
Invoking Section 11 of the Act once more, the power ministry final week allowed state and personal items to cost a compensation tariff in lieu of importing coal. But not many discoms can’t afford it due to their weak monetary state of affairs.
Majumdar mentioned, “The discoms proceed to be tormented by excessive distribution losses, delays in issuance of tariff orders, insufficient tariffs in relation to price of provide, delays/inadequacy of subsidy funds and delays in recovering electrical energy dues from state authorities our bodies. All of those have precipitated continued losses for state discoms throughout most states and delays in funds to power producing corporations. The overdues of discoms to power era corporations stood at Rs 1.3 lakh crore as of May 2022 in accordance to the PRAAPTI portal.
A senior govt with a state regulatory fee mentioned, the coal demand provide mismatch when discoms are sick, will lead to stress throughout the provision chain. “We are looking at a possibility of more stressed generating assets and litigation as well, not to mention discoms landing into more financial trouble,” he mentioned.
Power demand could be touching new data however the sector is taking a look at a dismal highway forward.