Coal Shortage Choking Thermal Power Plants

Coal Shortage Choking Thermal Power Plants

Subject – Geography

Context – India’s thermal power plants are facing a severe coal shortage, with coal stocks having come down to an average of four days of fuel across an increasing number of thermal stations.

Concept –

• The average level of coal stocks at an increasing number of India’s thermal power plants have come down to four days worth of stock compared to the government recommendations that thermal power plants hold 14 days worth of coal stock.
• The shortage of coal is more acute in non-pithead plants or plants which are not located close to coal mines with such plants accounting for 98 of the 108 plants seen to have critical levels of stock i.e under eight days.
• India’s coal fired thermal power plants account for 208.8 GW or 54 per cent of India’s 388 GW installed generation capacity.

Reason behind India’s coal shortage –

• A sharp uptick in power demand as the economy recovers from the Covid-19 pandemic coupled with supply issues have led to the current coal shortage.
• Other key reasons for the supply crunch include lower than normal stock accumulation by thermal power plants in the April-June period and continuous rainfall in coal bearing areas in August and September which led to lower production and fewer despatches of coal from coal mines.
• A consistent move to lower imports coupled with high international prices of coal have also led to plants cutting imports.

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Amendment to the Mineral Concession Rules, 1960

• In a move expected to help address the ongoing coal shortage at the country’s thermal power plants, the government notified rules allowing the sale of up to 50 per cent of the annual coal and lignite output of captive mines.
• The move to amend the Mineral Concession Rules, 1960 is expected to benefit operators of 100 coal and lignite blocks, with an annual production capacity of 500 tonnes.
• Captive mines are operated by end-users of coal, including steel and power sector firms.
• The amended rules paved the way for releasing of additional coal in the market by greater utilisation of mining capacities of captive coal and lignite blocks, which were being only partly utilised, owing to limited production of coal for meeting their captive needs.
• Lessees of such captive mines will be required to pay additional premiums to state governments above the ones paid for coal that they sell after meeting their own requirements.
• The move is expected to motivate lessees of captive mines to boost production beyond their own requirements.