Upset by coal and railway minister Piyush Goyal’s latest decision to prioritise coal supply to power plants, captive power plant (CPP) producers, who mainly run their generation units to cater to own steel, cement and other industries, have written to the minister and the Prime Minister’s Office, seeking immediate resumption of coal supply for CPP-based industries.
The letters, seen by FE, claim that the decision was taken without notifying the industry in advance and would compromise operations of about 28,000 MW of captive power generation capacity, in turn, jeopardising production in aluminium, steel, fertiliser and other sectors.
Following Goyal’s decision, the Railway Board notified all zonal railways on May 18 to accord higher priority for power plants while loading coal from goods sheds. Mahanadi Coal, a Coal India subsidiary, has even instructed that “no non-power rakes are to be supplied till further directives”.
Industry sources pointed out that instead of supplying 45 MT per annum as per the fuel supply agreement, coal received by CPPs have been declining since FY16. Coal India dispatched 32 MT in FY17 and FY18 against requirement of 190 MT. Only 12% of coal carrying rakes have been allocated for CPPs.
Shortage of coal at utility scale electricity generating units which supply to discoms has been plaguing the power sector, adding to the impediment of less-than-expected demand growth.
Stressed assets in the sector is valued at more than `1.74 lakh crore, triggering increased coordination between the power, coal and railway ministries to bring some relief to the industry. As on May 20, 16 power plants across the country had coal stock to run units for less than four days. The shortage has been mainly attributed to inadequate transport mechanism to ferry the fuel from mines to manufacturing plants.