Coal India warned government of coal shortage in February, documents show

Credit: REUTERS/Amit Dave

Coal India's warned the adviser to the federal power ministry in February of an impending fuel shortage as utilities tapped inventories and curbed purchases despite rising coal-fired power output, documents reviewed by Reuters show.

By Sudarshan Varadhan

CHENNAI, Sept 15 (Reuters) - Coal India's COAL.NS warned the adviser to the federal power ministry in February of an impending fuel shortage as utilities tapped inventories and curbed purchases despite rising coal-fired power output, documents reviewed by Reuters show.

India, which has the world's fourth largest coal reserves, is facing a shortage of the fuel and has urged utilities to import coal as supplies at several plants run low.

State-run Coal India told the Central Electricity Authority (CEA) that it was "evident that a crisis is arising" unless immediate action was taken to increase supply to power plants, according to a Feb. 4 letter reviewed by Reuters.

Coal India, the world's largest coal miner, generally asks utilities to stock up before the annual monsoon season when rains squeeze output and make transport more difficult.

But the company was more worried this year as coal-fired power output picked up with coronavirus-related restrictions easing, while utilities tapped stockpiles instead of buying fresh supplies, a senior Coal India official told Reuters.

Coal-fired power output grew nearly a fifth during the first eight months of 2021, outpacing overall generation growth of 13.2%. Coal accounts for more than 70% of India's power capacity.

The company had also said it would increase supplies to the non-power sector as utility purchases slowed, saying it might "take time" to cater to power plants "even if there is a sudden spurt in demand."

In another letter dated Feb. 25, the miner said power plants continued to use existing stocks despite requests to buy coal before the monsoon.

"Coal India has been requesting power houses to increase the stocks at its power plants to prevent any crisis in the future resulting from shortage of coal," a senior Coal India executive wrote to the CEA's fuel management director.

Seven months after the letter was written, average coal stock held by Indian coal-fired plants declined to a near three-year low of six days in September, compared with an April 2020 high of 31 days, CEA data showed.

Nearly 100 of the 135 plants had less than seven days of coal stock left as of Sept. 13, the data showed. Federal guidelines mandate utilities to hold at least two weeks supply.

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(Reporting by Sudarshan Varadhan; Editing by Edmund Blair)

((Sudarshan.Varadhan@thomsonreuters.com; +919810393152; Twitter: https://twitter.com/sudvaradhan @sudvaradhan;))

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