Coal shortage drives spot power prices to record high of Rs 20 per unit

By: |
August 30, 2021 4:30 AM

On August 28, there was a massive power supply shortage of 77.7 million units (MU), compared to the shortage of 2.3 MU on the same day in 2020, and paucity of 18.9 MU shortage recorded on the corresponding day in 2019.

“In the coming days, supplies from the coal companies to the power plants is expected to improve further to stand by the nation in these critical monsoon months and meet the demand of the power sector,” it said.“In the coming days, supplies from the coal companies to the power plants is expected to improve further to stand by the nation in these critical monsoon months and meet the demand of the power sector,” it said.

Price of power in the spot market touched an all-time high level of Rs 20/unit on Sunday as numerous coal-fired power plants across the country remained shut due to the short supply of fuel. On August 28, there was a massive power supply shortage of 77.7 million units (MU), compared to the shortage of 2.3 MU on the same day in 2020, and paucity of 18.9 MU shortage recorded on the corresponding day in 2019.

While the Rs 20/unit was discovered for one 15-minute time block on August 29, the average rate of power for the day at the Indian Energy Exchange was Rs 8.33/unit. The daily average spot power prices ranged between Rs 1.9/unit to Rs 3.8/unit in the first week of August, while in the second half of the month, it remained mostly above Rs 5/unit as coal supply issues became more prominent. Even supply from hydro power stations were less than expected, increasing demand from the spot market.

According to government data, units with combined capacity of 89,307 mega-watt (MW) had fuel stocks that would last for less than eight days as on August 24. Of this, more than 21,000 MW were hamstrung with Coal India (CIL) withholding fresh supplies demanding that past dues be cleared. As on August 24, more than 5,000 MW of generating capacity were already shut down, citing ‘coal shortage’.

CIL’s net receivables were as high as Rs 17,100 crore at the end of July. The current level of outstanding dues is equal to the amount the coal company has set as its annual capex target for FY22, which includes about Rs 1,500 crore that will be spent on the rail lines being constructed to improve coal evacuation.

Union power secretary Alok Kumar met officials of the Central Electricity Authority (CEA) and Union coal ministry on Friday to review the coal supply position. It was decided that supply will be regulated to plants having coal stock of more than 14 days for a week, and the fuel will be instead supplied to plants low stock. It was also decided to constitute a core management team comprising representatives from the power ministry, CEA and CIL for monitoring coal supply.

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