Government order on coal supply may hit non-power sectors
- The Non power sector companies raise their concern over government’s decision to prioritise coal supply to power plants.
- The government’s decision to prioritise coal supply to power plants will impact other industries dependent on coal such as cement and aluminium.
- To address the shortage of coal with power plants government has instructed the companies such as Mahanadi Coalfields Limited (MCL) to supply coal only for power plants.
- According to data with the Central Electricity Authority, 17 power plants had super-critical (less than three days worth) of coal stocks while three power plants had critical (less than five days worth) of stocks.
- The Railway Board instructs all zonal railways on May 18 about loading of coal for power houses (i.e. plants of Central/State power utilities and IPPs) from goods sheds should be accorded higher priority till June 30, 2018. These instructions were made applicable from May 19 onwards.
- The CPP (captive power plant) consumers have signed fuel supply agreements (FSA) with CIL (Coal India Limited), which is a legally binding agreement with long-term coal supply assurance and hence abrupt stoppage of supply will bring the industry to a grinding halt.
- Captive power plant Association said that CIL’s coal supply to independent power producers (IPPs) had grown every year and by as much as 8.1% in 2017-18. But the supply to captive power plants contracted by 6.2% in 2016-17 and saw no growth in 2017-18.
- Stoppage of supply of coal to power industry would have a severe impact on the downstream industry like transmission and distribution, packaging, cement, consumer products, paper, tyre manufacturing, resulting in a loss of jobs for millions.
- Analysts blame government for its laxity regarding maintaining critical stocks and its untimely decision to stop all coal imports for power generation which increase the pressure on domestic supplies.
- Non power sector companies accuse the government to stop the supply of coal abruptly with a notice of few hours. Government doesn’t follow the normal practice of informing one month prior to make alternate arrangements.