Fuel-stocking norms for power plants made more flexible

Designed by the CEA, these norms allow lower fuel stocks during the periods of low demand and mandate larger inventories during high-demand seasons.

The Union power ministry has approved the new coal stocking norms for power plants, which will give more flexibility for them.

Designed by the Central Electricity Authority (CEA), these norms allow lower fuel stocks during the periods of low demand and mandate larger inventories during high-demand seasons. The CEA also proposed penalty for power plants for keeping lower than prescribed fuel stocks.

Power plants located at pit-heads will now be required to keep coal stock for 12 to 17 days, depending on the month of the year, as against 15 days at present. Power plants situated far away from the mines will have to keep 20-26 days of stocks, compared with 20-30 days now.

As per the new norms, the daily coal requirement at the power plant at any given day will be calculated based on 85% plant load factor (PLF). The current norms determined coal stock volumes according to the average consumption pattern of the plant over the last seven days at a minimum 55% PLF. The new methodology implies power plants which have lower utilisation rates will need to stock more coal than they did earlier.

Apart from ensuring adequate coal stock, the norms are to be followed by the power plants to avoid the repetition of the recent crisis when a significant capacity of generating station had to be shut down due to low coal stocks. The power ministry had advised the CEA on September 6 to review the existing coal stocking norms and come up with a penalty mechanism for not adhering to the prescribed parameters.

Subsequently, in a meeting held on September 21 between the ministers of power, coal and railways, it was decided to formulate new stocking norms as per the monthly generation targets of power plants.

Since fuel consumption for all power plants located beyond 500 km of the coal mines is almost the same, therefore the new requirements categorise the units not according to the distance from the mine, but simply as pit-head and non-pit-head. Earlier power plants located at pit-heads were required to keep 15-days of coal stock, while the requirement increased to 20 days for plants located within 200 km from the mines, 25 days for stations within 1,000 km and 30 days for plants situated further away from the mines.

The earlier norms were applicable throughout the year and did not take into account that fuel supply and consumption varied in the different months. As per the new norms, plants will have to keep large stocks between February to June (pit-head: 17 days, non-pit-head: 26 days), and in September, when coal-based power generation is usually the lowest, coal stocks can come down to 12 days for pit-head plants and 20 days for non-pit-head units.

Higher coal usage in July-September, power plants not stocking enough before the monsoon and low alternative supply of coal have been attributed to low fuel stock levels at power plants, that resulted in electricity supply deficit rising to as high as 114.5 million units on October 7. The supply deficit subsequently moderated with higher coal supply and power demand falling with the advent of the winter.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express Telegram Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.