A peaking summer, coupled with an industrial revival, has led to a huge power shortage in the country. Even as the government claims it is pulling out all the stops to avoid a nation-wide power crisis, worsening of fuel stocks at thermal stations is likely to cripple electricity supplies in the weeks ahead, slowing economic activity.
Electricity shortage rose to 80 million units (MUs) on April 7, close to an all-time high of 82 MU seen on October 12, 2021, and up from a daily average of just 19.7 MU in March. Supply shortage during peak hours was 6,124 mega watt (MW) on April 7, even higher than the recent high of 5,591 MW (October 12).
The states that have already started witnessing temporary power outages in the last few days are Andhra Pradesh, Madhya Pradesh, Bihar, Jharkhand, Punjab, Haryana, Rajasthan, Telangana and Uttar Pradesh. Maharashtra, Gujarat and Tamil Nadu, the most industralised states in the country, are trying to hard to avoid load shedding by letting the state-run utilities buy expensive power – from gencos under short-term arrangements and even from the spot market.
Stating that the current situation is a “fallout of a high prices of imported coal and gas, which increased the pressure on domestic coal suppliers” rather than any laxity on the domestic coal front or on the part of railways in transporting the fuel, Union power secretary Alok Kumar told FE that the current level of coal stocks at power plants (24.5 million tonne) would suffice for 12 days, at the current level of consumption. He added that it was ‘almost impossible’ to change the logistics design in a short term, but listed out the steps taken by the government to avert a major power crisis. “Domestic coal production and transportation by the railways are being increased to the maximum level possible in the short term. We have also advised states and power companies owned by the Centre like NTPC and DVC to import coal for blending, and this has started happening. Our utilities will also import around 9 million tonne of coal by June, without putting any additional pressure on transportation of domestic coal by the railways.”
Kumar noted that imported coal-based power plants of Adani and Tata Power in Gujarat started generation in March. “We have been working with them (units relying on imported coal) and the ministry will convene another meeting with them next week to address certain pending issues.” The official added that all the ministries concerned – coal, railways and power – were working collectively to see that there was no disruption of power supplies. “That is our highest collective priority. We are trying to address the issue in the best possible manner,” he said.
The secretary said the railways has committed to induct 0.1 million more wagons in the next 2-3 years and identified several places in their rail network to enhance capacity of loading and transportation.
To address the power shortage, the Maharashtra Cabinet on April 9 approved purchase of 760 MW of power from Coastal Gujarat Power, a subsidiary of Tata Power. Under the agreement to be valid till mid-June, the state distribution utility MahaVitaran will get power at Rs 5.5-5.7/ unit against the spot power price of `12/unit. The deal will help Tata Power’s loss-making 4,000 MW ultra mega power project in Mundra to recoup part of its under recoveries. The company is currently operating three of its six units to supply power to the Gujarat discom on a supplemental basis.
Although high cost of coal has made operations difficult for plants that use imported fuel, JSW Energy and JSPL have been supplying expensive power to spot buyers on power exchanges in recent weeks. GVK Power that supplies power to Punjab from the Goindwal Sahib Thermal project is operating at a 10% PLF as the state government has stopped purchases due to the higher tariff of Rs 5-6/unit.
Issac George, CFO of GVK Power, told FE: “Transport of coal to a land-locked state like Punjab increases the fuel costs further. Also, the state government only purchases as per its requirements, forcing us to operate at a very low PLF.” George added that if domestic natural gas was made available to the company, it could have produced power from combined cycle gas-based plants at a cost of `1/unit lower than the coal-based ones.
According to the Union power secretary, since ‘some (coal demand-supply) imbalances’ persist in many areas of the country, states have been given the flexibility to re-allocate coal lifted within their quotas among their different plants. “It’s a matter of optimisation and the unloading infrastructure. At some of the plants in Maharashtra and Gujarat, for instance, the consumption level is high. So, there is a pressure on unloading of rakes. The rakes’ detention time is sometimes much higher than the norm. We are conscious of the need to give coal to power plants which are low on coal stocks,” he said.
Kumar said power consumption in FY23 would be in sync with projections. As against a CAGR of 4.5-5% in recent years, the consumption may grow at 7-8% in the current fiscal, he said. Going by the projections, supply could be less than demand by 9%, he noted.
Imported coal prices, which used to be in the range of $50-60 per tonne, have been ruling consistently above $100 per tonne for the last ten months. The current prices are even higher at $150-160 per tonne.
Similarly, the landed cost of LNG, which used to be available at $8-9 per mmBtu, have recently been very high at around $40, owing to the Russia-Ukraine war.
In Tamil Nadu, the average daily power consumption has increased from 290-300 MU in 2021-22 to a level of 320 MU now and could rise to 390 MU over the next few days. While the state’s installed thermal power capacity is 16,219 MW, the average power demand is around 15,000 MW and the peak summer demand is 17,000 MW.
According to the state government officials, low availability of coal is putting pressure on the operations of state-run TANGEDCO’s thermal power stations in the state. The total coal required for TANGEDCO’s power plants is 72,000 tonne per day and annual requirement is 26.28 million tonne. Fuel supply agreements (FSAs) available with coal companies at present is for 23.8 tonne per annum.
Recently, chief minister MK Stalin met Prime Minister Narendra Modi and urged him to ask Coal India to allot entire quantum of coal under FSAs to the state and additional quantities to meet its balance requirements.
“Short supply of rakes causes insufficient supply of coal to TANGEDCO. The gap in power generation is thus being filled by buying power at exorbitant rates at energy exchanges, the state had pointed out to the Centre. It requested the Centre to provide at least 20 rakes for transport of 72,000 tonne coal per day from Talcher /IB valley to Paradip and Visakhapatnam ports. Further, the state wanted the railways to allot adequate quantum of coal rakes to realise entire quantum of allotted linkage coal.
Officials from the West Bengal government, however, say they saw little possibility of power outages in the state since its power plants are not much dependent on supplies from Coal India. West Bengal Power Development Corporation sources only a third of its coal requirement from CIL and meets two-third of its requirement from captive sources. Same is the case with CESC, generating 1,225 MW with its command area limited to Kolkata and adjacent areas. DVC, generating 5,750 MW of power from West Bengal, is the mainstay industrial supplier. It sources 50% coal from CIL, imports some and gets the rest from its captive mines. “West Bengal can more or less meet the peak demand of 7,000 MW and is not subject to coal shortage,” an official said.
“Last year, around September, when the entire country was facing a power crisis, West Bengal was the only state which ensured steady supplies even amid the extra load of the power required for the Durga puja. In some cases, we purchase spot power to meet our demand, but hardly resort to power cuts. Only a system default can lead to power cuts in the state now,” state’s power minister Aroop Biswas told FE.
(With inputs from Indronil Roychowdhury in Kolkata)
