Centre pressurising States to import coal: AIPEA

The Ministry of Power earlier advised State Gencos to import 10% of coal requirement for blending purposes. States were advised to place order by 31.5.2022 such that delivery of 50% quantity is ensured by 30.6.2022, 40% by 31.8.2022 and remaining 10% by 31.10.2022

Mumbai: All-India Power Engineers Association (AIPEA) has accused the Centre of pressurising States to import coal to tide over the electricity supply crisis.

Talking to Bizz Buzz, infrastructure watcher BN Kumar said the latest government statements reflect the confusion and lack of seriousness over the coal supply. The power Minister himself admitted that BJP-ruled States such as Uttar Pradesh and Karnataka have not taken the import of coal seriously which raises many questions."

The power engineers' federation has been sounding alarm bells for some time and they needed to be taken very seriously to avoid another coalgate type scam – be it in terms of over invoicing or ensuring uniform fuel supply to all the 108 coal-fired thermal power plants, he said.

The use of imported coal is bound to have its impact on tariffs since the landed cost of imported coal works out at Rs 13,000 per tonne as compared to domestic coal price of about Rs 10,000 per tonne. Added to the inflationary pressure, rising costs of all essentials such as pulses and vegetables and fuel, increased power tariff will increase the size of the hole in the common man's pocket, he added.

AIPEA has apprehended that the generation cost might shoot up by around one rupee per unit by blending fuel with 10 per cent imported coal. "The Centre should bear the additional cost on imports because the States are not to blame for the crisis", Association Chairman Shailendra Dube said.

He pointed out that the landing cost of imported coal at power plants works out at Rs 13,000 per tonne against the domestic one that costs Rs 10,000 a tonne. The cost generation could go up to 80 paise to Rs 1.10 per unit.

Dube was aghast that the Union Power Ministry has warned the States of 5 per cent domestic supply cut, forcing them to import 15 per cent of the requirement. Currently, the Centre's advice to State Gencos is to blend the fuel with 10 per cent imported coal. The Ministry gave an ultimatum to States to complete the process of coal import by May end and start blending with domestic coal by June 15 or face the quota cut.

This amounts to applying undue pressure on States to import coal, he pointed out. The Centre says that Coal India's production has gone up. At the same time, it pressurises States to go for imported coal. This proves the Centre's determination to go for imported coal, Dube argued.

He pointed out that the 108 coal-fired power plants have 25 per cent less than the normative stock and this is a critical stage. Citing the rail rake shortage as one of the causes of coal supplied not reaching Gencos, Dube wondered how could be imported stick reach the States, thousands of kilometres away from ports.

He blamed the lack of coordination among power, coal and rail ministries for the current crisis and hence the States should not be burdened with the extra cost of using imported coal. The centre must bear this additional expenditure, the association added. On the other, Union Power Minister, RK Singh is upset at the delay in import of coal.

Expressing concern at some States, including Uttar Pradesh, not even initiating the process of importing coal to be blended with domestic fuel for thermal power plants, the Centre has waned of power crisis ahead.

On the one hand Union power Minister RK Singh dashed off letter asking states to tell Gencos to take immediate steps to import coal, while on the other the Ministry issued a veiled threat to cut domestic coal supply by 5 per cent to force States to use 15 per cent imported coal.

The Minister, in separate letters to Haryana, Uttar Pradesh, Karnataka and West Bengal, has expressed concern that tender process for coal import has either not started or not completed in these states.

The ministry officials, in separate letters to States, said the import by States of coal for blending is not satisfactory. In 2018-19 a total of 21.4 Million Tonnes of coal were imported for blending. In 2019-20, the total import for blending was 23.8 Million Tonnes whereas in 2021-22, it was only 8.3 Million Tonnes. This is the cause of the stress in the availability of coal.

The Ministry of Power earlier advised State Gencos to import 10 per cent of coal requirement for blending purposes. States were advised to place order by 31.5.2022 such that delivery of 50 per cent quantity is ensured by 30.6.2022, 40 per cent by 31.8.2022 and remaining 10 per cent by 31.10.2022.

Singh further asked that State Gencos may lift entire quantity of coal offered under RCR mode expeditiously to build coal stock. He stressed that in case of failure on either account, it would not be possible to give additional domestic coal to make up the shortfall.

Singh warned that the allocation, if not lifted, will be allocated to other needy State Gencos. He expressed the fear that shortage of coal in states during monsoon will adversely affect the power supply situation in the States if present state of affairs

Singh highlighted that due to increase in demand and consumption of electricity, the share of coal-based generation has increased and the total coal consumption by power plants has also increased.

Materialization of domestic coal is only about 88 per cent of total requirements. In order to ensure minimum required coal stocks in power plants before the onset of monsoon, the Minister has directed that the thermal power plants owned by State Gencos and IPPs must use all the sources to maintain adequate coal stock.

Meanwhile, the Power Ministry has issued directions to all Gencos that if the orders for import of coal for blending are not placed by Gencos by 31.05.2022 and if the imported coal for blending purpose do not start arriving at the power plants by 15.06.2022, all the defaulter Gencos would have to import coal for blending purpose to the extent of 15 per cent (in order to meet shortfall of imported coal for blending purpose in Quarter1 i.e. Apr-June 2022) in the remaining period up to October 31.

It has further said that not much blending has taken place in the months of April and May, the power plants (who have not yet started blending by imported coal) will ensure that they blend coal at the rate of 15 per cent up to Oct 2022 and thereafter at the rate of 10 per cent from November to March.

The ministry, in letter written to State Secretaries/Principal Secretaries and all Gencos, has said that keeping in view the likely less materialization of coal supply from domestic sources as compared with the requirement to meet power demand, domestic coal will be allocated proportionately to all Gencos based on likely availability from June 01 and the balance requirement will need to be met from imported coal for blending purpose and target set for production in captive coal mines. If blending with domestic coal is not started by June 15 then the domestic allocation of the concerned defaulter thermal power plants will be further reduced by 5 per cent. Accordingly, revised allocation of domestic coal for the month of July onwards will be conveyed based on the above methodology. All Gencos have been advised to ensure adequate stocks at their power plants for smooth operation until October.

The ministry has directed that the imported coal-based plants should run and the State should import coal for blending, as in the previous years. Ministry of Power had issued directions u/s 11 of the Electricity Act that all the imported coal-based plants start running and most of them have started running.

Ministry of Power (MoP) on December 07 had issued advisory to all domestic coal based power plants to import coal to meet their requirements by blending with imported coal to the extent of 4 percent by State Gencos & Independent Power Producers (IPPs). MoP had issued the revised advisory on April 28 for importing coal for blending purpose to meet the requirement at 10 per cent of the total requirement by October 31. The requirement for blending for each Genco and IPPs at 10 per cent was also intimated and it was advised to place the awards for import of coal (for blending) by May 31 in order to ensure that 50 per cent per cent quantity is received by June 30, 40 per cent quantity by August 31 and 10 per cent quantity by October 31.