Coal Stocks Hit Rock Bottom

Friday, July 18, 2014
Coal India has struggled to raise output fast enough to meet rising demand (photo: AFP)

Coal is used to generate more than half of India’s electricity, yet the country's largest power producer NTPC has warned that six coal-fired power plants have just enough stocks to last up to two days. India is struggling to provide enough power to meet rising demand, with millions going without power and blackouts common.

NTPC Chairman Arup Roy Choudhury wrote to the Ministry of Power on July 14 that stocks at three of the six plants – which have a combined capacity of 16,840 megawatts or 15 per cent of India's thermal energy capacity – would last less than one day, according to Reuters.

Coal India is the world's largest coal miner and accounts for about 80 per cent of India's coal production, but has failed to meet its output targets for several years due to delays in obtaining environmental approvals for mines. As a result, despite sitting on the fifth-largest coal reserves of the fuel, India remains the world's third-largest coal importer.

The weak monsoon rains have also affected output from hydropower plants – which provide about a fifth of India's energy – thereby putting extra pressure on the thermal plants to raise output. But the onset of rains may also threaten to disrupt supplies between mine to power plant.

Power Minister Piyush Goyal pointed out recently that 26 out of 100 coal-based power plants in the country had "super critical" stocks – or only enough to meet requirements for less than four days.

According to the Economic Survey report presented to Parliament last week, the Finance Ministry called for the “swift” restructuring of Coal India to “boost coal production."

Reuters had reported in May that the Modi administration could consider breaking up some of Coal India's eight local units and making state governments equity holders to help speed up land acquisition.

The federal government, which has a 90 per cent stake in Coal India, is considering the sale of a 10 per cent stake as part of its efforts to raise a record $10.5 billion from asset sales this fiscal year ending March 31, 2015 to keep the deficit under control.

Yet unions representing Coal India workers claim they will oppose any move to sell a stake in the state-owned company, a union leader said on Friday.

"We will not allow the government to sell any stake and will hit the streets if needed," warned D.D. Ramanandan, vice president of the All India Coal Workers Federation.

Last year unions successfully blocked the previous UPA administration's move to sell a 10 per cent stake of the company. Workers fear that divestment or any restructuring of Coal India would eventually lead to jobs cuts.


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