During April through June, the Indian energy ministry expects a 21mn t deficiency in domestic coal supplies due to logistical hurdles, according to Argus; thus, they will need to build a distribution strategy to meet peak summer demand.
Domestic coal supplies from state-controlled Coal India (CIL), Singareni Collieries (SCCL), and captive blocks are predicted to be approximately 201mn t for the quarter, compared to projected demand of 222mn t, according to a ministry letter to Indian states dated March 24. Argus has reviewed the letter. The possible supply-demand imbalance exists despite authorities having made precautions to guarantee utilities have adequate coal supply to fulfil summer electrical demand.
According to the energy ministry, the expected shortfall is “due to constraints in railway logistics.” The need for sufficient transportation infrastructure, such as railway links or smooth roads, to transport coal from mines, primarily located in rural areas of the country, has been a significant obstacle in India’s efforts to increase domestic coal output and supplies. The availability of railway rakes often decreases during the summer’s peak season, impacting utility replenishment and generating.
Following the government’s recent instruction on coal blending, several Indian utilities are already on the market seeking pre-monsoon cargoes, bolstering the outlook for India’s thermal coal imports in the coming months. According to figures compiled by the shipping agency GAC, India’s thermal coal imports increased by 3.79 million tonnes compared to the same month a year ago, reaching 10.95 million tonnes in February.
The electricity ministry stated that it had instructed state governments to prepare to address potential coal shortages to maintain uninterrupted power supplies.
Distributional equity
The ministry stated that the available domestic coal from CIL and SCCL would be allocated to Indian generators “fairly and transparently” via railway rakes. The allocation mechanism will consider the ratio of utilities’ average fortnightly generation.
The policy will become effective on April 1.
All pit-head coal-based power stations, which account for around 20% of India’s installed generation capacity, will be excluded from the programme because they do not receive coal via rail cars. It will also exclude all coal-fired power plants that receive coal by road, accounting for approximately 3% of India’s overall generation capacity. Most of India’s coal-powered utilities are located far from the mines; hence, they rely largely on the existing coal transportation infrastructure and the availability of railway rakes.
According to the power ministry, the availability of rakes would be decreased for state-owned producers found to be selling huge amounts of electricity generated from domestic coal on electrical exchanges. It was said that surplus power from a state’s generators should be available to other electrical distribution utilities to help satisfy the nation’s power demand.
