Aluminium sector to confront shortage of dry fuel as centre prioritizes power sector

The non-power sector consumers of coal are expected to confront a shortage of dry fuel in January, as the centre continues to prioritise supply to the power sector. The decision of the Central government to prioritize the supply of coal for thermal power plants since July has raised concern among the non-power sector coal buyers like aluminium, steel and cement. As a result of which, the non-power sector coal buyers have complained about the low coal supply from Coal India Ltd (CIL). 

Aluminium, steel, and cement producers who rely on domestic coal to power their plants have expressed concern that low supplies are driving up input costs. Especially, for the aluminium producers, even a two-hour power outage could result in extended shutdowns.

According to an industry source, several facilities are now acquiring more expensive grid electricity and utilising a combination of more expensive imported coal to keep their plants running.

Consumers in the non-power sector, who had seen a minor improvement in coal supply from CIL in November, have complained that supplies had been cut again in December.

“We have issued revised coal stocking norms (for thermal power plants). We need to have 58 million tonnes (of coal stock) by the end of March. Gradually, things will improve and by the end of January it should improve (for non-coal consumers also),” said a government official who did not wish to be quoted.

The 180 thermal power plants that are monitored daily have total coal stock of 23.3 million tonnes, compared to a normative demand of 59.1 MT. Thermal power facilities may not be able to amass normative stock levels by March 2022, according to the authority stated above.

In October, states like Uttar Pradesh, Rajasthan, and Punjab were forced to implement load shedding due to low coal supplies at thermal power plants, while states rushed to power exchanges, paying three-four times normal rates for electricity due to insufficient supply. Since then, the Centre has raised stocking standards, requiring thermal plants to have larger inventories between February and June, just before the monsoon season, when coal stocks tend to plummet.

Non-power coal customers require roughly 45-50 rakes of coal per day, according to experts, and supplies had dropped to only 27 rakes per day in October. According to industry sources, supply to the non-power sector grew to 33-34 rakes per day in November but has since declined again.