Coal Supply Crunch Has Led Non-Power Sector To 'Catastrophic Conditions' Say Industry Associations

Industry associations have written to Prime Minister Narendra Modi on deteriorating coal supply to the non-power sector, stating that curtailment in fuel supply by rail as well as road and road cum rail (RcR) modes over the last few weeks has pushed the sector towards a "catastrophic" situation.

Moreover, the fertiliser being part of the regulated sector is also suffering immensely due to a supply crunch from the indigenous sources, they said in a joint representation.

The associations include the Aluminium Association of India, Coal Consumers' Association of India, Confederation of Indian Textile Industry, Indian Captive Power Producers Association, Sponge Iron Manufacturers Association, and Fertiliser Association of India.

"While the regular supply of coal rakes to the utilities have helped the stock of dry fuel at the country's power plants to rise, we beg to state that despite several representations by various industry players as well as the associations, the coal supply scenario to the non-power sector has deteriorated even more. Further curtailment in supply by rail as well as road and road cum rail (RcR) modes since the last few weeks has caused the plight of NRS consumers to descend towards catastrophic conditions," they said.

 Industries like aluminium, cement, steel, sponge-iron, paper, fertiliser, chemical, rayon and their captive power plants (CPPs) are mostly dependent on domestic coal as fuel as well as a direct feed in the process of manufacturing.

This adverse supply situation that started around August/September last year became further arduous as coal stock at many plants plunged below a critical level. The demand-supply ratio had shown signs of improvement during November. However, the supply to the NRS consumers, including CPPs, has plummeted once again despite October-March being the highest production months for Coal India Ltd.

"Industries plan for their fuel requirement well in advance. Therefore, any sudden changes in supply commitment from the indigenous sources create a huge impact in plant operations," the associations explained.

Energy-intensive and continuous process plants along with their captive power plants are highly dependent on coal as a primary source of fuel. Therefore, interruption in the fuel supply chain is forcing many plants to run at a lower capacity and adversely affecting their cost of production. Higher cost of production will ultimately affect every section of the society, they said.

"It is our humble submission that the standard policy of the Ministry of Coal (CCEA approved) may be strongly implemented to ensure a justified ratio of coal allocation between the power sector and industries so that the consumers are not deprived of their legitimate entitlement and could continue their production economically for delivery of goods at an affordable price to the common people," they said. 

Coal India on Saturday said it is currently supplying around 3.4 lakh tonnes of coal per day to the non-power sector which is the company's average supply to this segment and stressed that it has sufficient buffer stock to increase supply to the sector.