Electricity generators refusing to lift coal as power demand falls due to lockdown

Forty thermal power units with a capacity of at least 30 gigawatt, mostly from northern India, have stopped lifting coal as demand has fallen sharply during the lockdown. This has led to an increase in stocks at pitheads by nearly 20 million tonnes to about 75 million tonnes.

“Many electricity generators have officially asked us to stop supplying,” a senior Coal India Limited (CIL) executive told ET on condition of anonymity. “Some are not filing their rake requirements with railways, leading to non-allotment and no supplies. For others, the turnaround time of rakes has increased considerably, leading to lesser supplies.”

Bulk of the power plants refusing to lift coal are from Haryana, Punjab, Uttar Pradesh and Rajasthan, said the executive.

CIL’s subsidiary Central Coalfields is the worst hit as almost all its power consumers are refusing to accept supplies and make payments.

According to an executive, stockyards of a number of power plants are full they cannot accommodate additional supplies. Others want to reduce inventory costs as their finances are strained due to non-payments by state utilities, he said.

Fuel supply agreements signed with CIL require generators to pay penalty for procuring less than 75% of the year’s quota for a set of plants and 90% for others. If a company officially requests CIL to stop supplies it may have to pay a penalty. However, if it adopts other tactics to slow down coal receipts, it may not always be penalised.

Power demand has fallen 30% since the lockdown began, forcing nearly 65 GW of coal-fired plants to back down. Capacity utilisation has fallen to less than half, reducing fuel requirement, said industry executives.

For 2019-20, the plants procured 66 million tonnes less than the 530 million tonnes of coal they had asked for. Some have not procured 70% of their quota and may be penalised, said a CIL executive

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