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Govt lists 4 reasons for depletion of coal stocks amid warning of power crisis

By Priyanka Verma 
Updated Date
Govt lists 4 reasons for depletion of coal stocks amid warning of power crisis

The Union ministry of power has listed four reasons for the depletion of coal stocks, including an unprecedented increase in demand for electricity due to the revival of the economy, after chief ministers of Delhi, Punjab and Andhra Pradesh flagged the issue of shortage of coal at power plants. The power ministry said that an inter-ministerial sub-group led by the ministry of coal has been monitoring the coal stock situation twice a week as declining coal reserves sparked concerns of a power crisis in the country.

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Reasons for the depletion of coal stocks

1) An unprecedented increase in demand for electricity.

2) Heavy rains in coal mine areas during September 2021.

3) An increase in prices of imported coal to an unprecedented high level.

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4) Non-building of adequate coal stocks before the onset of Monsoon

“There are four reasons for the depletion of coal stocks at the power plant end- unprecedented increase in demand for electricity due to the revival of the economy; heavy rains in coal mine areas during September 2021 thereby adversely affecting the coal production as well as despatch of coal from mines; increase in prices of imported coal to unprecedented high level leading to a substantial reduction in power generation from imported coal-based power plants leading to more dependence on domestic coal; non-building of adequate coal stocks before the onset of Monsoon,” read the release.

Delhi chief minister Arvind Kejriwal said on Saturday the Capital could face power outages if the Centre does not quickly resolve the coal shortage at power plants. Kejriwal wrote to Prime Minister Narendra Modi after reports that over half of 135 coal-fired utilities, which supply more than half of India’s electricity, have fuel stocks to last just under three days.

Legacy issues of heavy dues of coal companies from certain states—Maharashtra, Rajasthan, Tamil Nadu, UP, Rajasthan and Madhya Pradesh—have also added to the crisis, the power ministry said.

The power ministry said the revival of the economy after the second wave of the coronavirus pandemic led to an unprecedented increase in demand and consumption of electricity. “The daily consumption of electricity has crossed beyond 4 Billion units per day and 65 per cent to 70 per cent of the demand is being met by coal-fired power generation only, thereby increasing dependence on coal,” it said.

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“Power consumption for the period August-September has progressively increased from 106.6 BU per month in 2019 (normal non-covid year) to 124.2 BU per month in 2021. During this period the share of coal-based generation has also increased from 61.91 per cent in 2019 to 66.35 per cent in 2021. As a consequence, total coal consumption in the month of August-September, 2021 has increased by 18 per cent in comparison to the corresponding period in 2019,” it added.

The power ministry also said that the imported coal price of Indonesian coal jumped from $60/ton in March-2021 to $160/ton (in September/October 2021) of 5000 GAR (Gross as received) coal. “The import of coal has decreased in comparison to 2019-20 due to import substitution and rising prices of imported coal. The reduction of imported coal is compensated by the domestic coal for power generation, hence increasing the demand for domestic coal further,” the release said. “As compared to 2019, there has been a 43.6 per cent reduction in power generation from imported coal which led to extra demand of 17.4 MT of domestic coal during Apr-Sept, 2021.”

The power ministry issued guidelines on October 8 for operationalising optimum utilisation of generating stations as per the requirements in the electricity grid. These guidelines will enable imported coal-based plants with sufficient coal to operate and ease out the burden on domestic coal.

The power minister constituted a Core Management Team (CMT) on August 27 in order to manage the coal stock and ensure its equitable distribution. Representatives from MOP, CEA, POSOCO, Indian Railways and Coal India Limited (CIL) have been tasked with ensuring daily monitoring. The CMT is closely monitoring and managing coal stocks on daily basis and ensuring follow up actions with CIL and Indian Railways to improve the coal supply to power plants. CMT in its meeting held on October 9 reviewed the status.

“It was noted that on October 7, the total dispatch of coal by Coal India Limited (CIL) touch 1.501 MT thereby reducing the gap between consumption and actual supply. Ministry of Coal and CIL have assured that they are making best efforts to increase dispatch to the power sector to 1.6 MT per day in the next three days and thereafter try to touch 1.7 MT per day,” the power ministry said in the release. “It is likely to help in the gradual build-up of coal stocks at the power plant in near future. The coal supply, as well as the consequent power situation, is likely to improve

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