Coal supplies to non-power sector plants may be kept suspended

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SME Times News Bureau | 13 Oct, 2021
Even as supplies of coal are being ramped up at power plants, supplies to non-power sector plants may be kept suspended.

Southern Eastern Coalfields, a subsidiary of Coal India has finalised the supply matrix of coal rakes to critical power plants after a meeting held by the Coal Ministry.

The power plants where coal rakes will be provided are Rajpura, HRVUNL, Kawai, Akaltara, Binjkote, DSPM, Pathad, Sabarmati, GSECL, Uchpanda, Annupur, Seoni, MPPGCL, Amrawati, Warora, Dhariwal, Tirora, NTPC, and Mahagenco.

Since the supplies of SECL are yet to be normalised, the supply of coal will be done equitably to these power plants. "Supplies to non-power sector plants may be kept suspended till further information," the SECL said.

Meanwhile, the Aluminium Association of India (AAI) has written to Coal India on the alarming situation for the industry due to critical coal shortage and urgency for immediate resumption of coal supplies for survival of domestic industry.

Despite untiring efforts of the Coal Ministry and the CIL to support the industry, the current acute coal crunch due to various factors which has created an immensely precarious situation, majorly for the highly power intensive industries like aluminium wherein coal accounts for 40 per cent of the production cost.

Aluminium smelting requires uninterrupted quality power supply for production which can be met only through in-house CPPs which operate 24/7 and 365 days, and have signed FSA (Fuel Supply Agreement) with the CIL and its subsidiaries for assured long term coal supply.

The recent decisions for stoppage of secured coal supplies and rakes for non-power sector is detrimental for aluminium industry and will jeopardize the sustainability as these continuous process-based plants are not designed for adhoc shut down and start of operations.

Any power outage/failure (2 hours or more) results in freezing of molten aluminium in the pots which will lead to shutting down of plant for at least 6 months rendering heavy losses and restart expenses, and once restarted, will take almost a year to get desired metal purity.

Aluminium is a sector of strategic importance and an essential commodity for diversified sectors crucial for nation's economy. Huge investment of Rs 1.2 lakh crore ($20 billion) have been made to double the domestic production capacity to 4.1 mtpa to cater to the country's increasing demand. The industry employs one million people and has developed 4000 SMEs in downstream sector.

"The entire industry has been brought to a standstill and left with no time to devise any mitigation plan to continue sustainable operations. The coal stocks of operational plants have depleted to alarmingly low critical stocks of 2-3 days, from the level as high as 15 days in the month of April, 21, and plants are forced to operate at reduced power generation with huge risk of closure with threat of loss of huge employment and deterioration of MSMEs," the AAI said.

Moreover, the ongoing global aluminium shortage due to supply demand mismatch is also adding to the woes for industry with the current coal situation in India.

Adding to the plight of industry, the exponentially rise in coal prices have created a double whammy as the global coal prices have gone up exponentially and are on an upward trend while the ocean freight rates are also at all-time high.