India cuts coal supplies and halts auctions as inventories collapse


Inventories were also hit as India’s coal imports fell to a nine-year low in 2021 on a rise in global prices

Inventories were also hit as India’s coal imports fell to a nine-year low in 2021 on a rise in global prices

India has scaled back coal supplies to the non-power sector and shelved plans for some fuel auctions for uncontracted utilities due to a collapse in inventories, even as the country struggles with a seasonal surge in power demand.

The supply cuts come months after India’s most crippling coal shortage in years caused power outages of up to 14 hours in some states, and amid worries that grueling summer temperatures will exacerbate the shortages.

Coal inventories at state utilities, which account for a third of all coal-fired power plants, have fallen to 22% of regulation, the lowest level this year. Inventory levels below 25% are considered “critical”.

State-owned Coal India, which accounts for more than 80% of domestic production, has cut supplies to the non-energy sector – which includes aluminum smelters and steel mills – to 2,75,000 tonnes a day, according to an internal company release by Reuters, 18 3% lower than February and 29.8% lower than March 2021.

Coal India told Reuters that its deliveries to the non-energy sector have been in line with average over the “recent years”, without elaborating.

Among other measures to tighten supply, Germany’s coal ministry has shelved a plan to hold three utility coal auctions over the next three months and will instead organize one auction for the quarter as the method for holding three auctions is “in progress.” “.

South Eastern Coalfields, a unit of Coal India, has extended the payment due date for auctions held on March 11, delaying delivery, and also canceled another auction scheduled for March 21, the reports said on his website.

Production and shipments through Coal India typically decline from April and taper off from June to September due to the annual monsoon season choking production in some areas.

“Given the prevailing low coal stocks and ever-increasing coal demand, Coal India would need to ramp up production significantly… to avert a domestic coal shortage,” said Jayanta Roy, senior vice president at Moody’s ICRA unit.

The world’s largest coal miner said he expects production to increase and sees no coal crisis for the energy sector.

Germany’s coal ministry did not immediately respond to a request for comment, but said on Saturday companies could consider imports to address the shortage.

Record low imports, high prices

However, high global coal prices would place an additional financial burden on companies looking to import the fuel. This would also lead to higher input costs for power generators and indebted state-owned distribution companies.

Senthil Balaji, electricity minister for southern Tamil Nadu state, said high global coal prices could push electricity procurement costs down to as much as £9 per unit, more than 2.4 times the average procurement cost in the year to March 2021.

Coal inventories at state government-run power plants have fallen despite record production from Coal India in 2021 as the company plans to supply to state-run NTPC Ltd.

Data from the Department of Energy showed.

Inventories were also hit as India’s coal imports fell to a nine-year low in 2021 on a rise in global prices.

Khammam, Telangana, 11/30/2021: The December 9 strike at the state-owned Singareni coal company, called by the ruling TRS subsidiary TBGKS, is expected to result in lost production totaling 1.50 lakh tons of coal per day at the company's 46 coal mines.  TBGKS is preparing to monitor the strike to push for a five-point charter of demands, including removing four SCCL coal blocks from the Coal Department's commercial mining auction list.  Last year, the unions affiliated with the central unions organized a three-day strike in the Singareni coalfields to protest the centers' move to auction blocks of coal for commercial mining.  Photo: GN RAO / Peppystores

Non-energy consumers such as aluminum smelters and steel companies have stepped up their lobbying in recent days, urging Coal India to increase supplies as they seek to cash in on their cheap coal and boost competitively priced exports.

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