Coal crisis: AP Inc pins hopes on govt support

Visakhapatnam: Even as the captains of industries are keeping their fingers crossed over possible fallout of the coal crisis triggered by phenomenal increase in prices in the international market following shortfall in production, there is hope that there will not be further disruption.

Certain initiatives launched by the Central and State Governments have raised hopes of some reprieve, said Andhra Pradesh chapter of Confederation of Indian Industry (CII).

"The situation may not aggravate further as the government is focusing on increasing production mainly by allowing the sale of 50 percent of coal produced at mining blocks in the open market, which were auctioned earlier. The coal supplying States are also no more hit by monsoon-induced rains,"Neeraj Sarda, vice-chairman, CII-AP chapter, told Bizz Buzz on Monday.

The global energy crisis was caused by cumulative factors like stoppage of coal mining in Shanxi province in China, production of wet coal from flooded mines in highveld region of South Africa, stoppage coal procurement from Australia by China and Indonesia's decision to shutdown coal-fired power generation to achieve its carbon neutral goals. There is not much improvement in domestic coal production in India since 2018 mainly due to thrust on solar power generation.

As the Government of India preferred to avoid load shedding, it tried to ensure normal supplies to power plants, while reducing the quantity of coal supplied to the non-power industries like steel, cement, ferroalloys and refractories. India has set an ambitious goal to expand its renewable power industry market to $20 billion in the next two to three years.

"At present, the situation is not as grim as it appears to be. We are hopeful that there will not be much disruption in the near future," Sarda said.

The primary fuel for steel, oil and cement is coal. About 70 percent of raw material is met from coal for most of the manufacturing units. The coal situation worsened to such an extent in the United Kingdom that the military was called to man fuel bunks which ran dry in some areas. Former Director (Commercial) of Rashtriya Ispat Nigam Limited (RINL) K.C. Das said the steel industry's profit margins may shrink, some even pushed to losses as the gain they achieved following fall in prices of iron ore is negated by the abnormal increase in prices of coal.

In AP, the officials said the situation is under control due to timely interventions. Officials said that the APGenco thermal plants had received 24,000 tonnes on an average per day in September-2021 against the total requirement of 70,000 tonnes. This was raised to 40,000 tonnes per day on the request of the State Government recently.

"The shortage in coal production across the country for the last two years, steep rise in coal prices in the international market and the surge in grid demand in AP recently have led to power crunch in our State," a senior official said. He said however, the State Government is taking all necessary steps to tide over the crisis to avoid inconvenience to the consumers.