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Shortage of Coal Supplies Continues to Cripple Non-Power Sectors

The Indian Captive Power Producers Association (ICPPA)In a recent representation to Ministry of Coal, Railways and Power, Government of India has sought urgent support for normalizing the coal supplies to Captive Power Plant (CPP) based industries. It has highlighted the issue of insufficient coal rake supplies to CPP based industries at levels of 40% to 50%. If this is not restored immediately, it would lead to an irrevocable collateral damage of these national assets.

In the last few months, the supplies meant for CPPs & industries have been either stopped or significantly curtailed for diversion of these to the power sector, which has led to a perilous situation for other Coal-based Power Generators (CPP), adversely impacting their industrial operations. The decision of Coal diversion, left CPP-dependent industry with no time to devise mitigation plans for sustainable operations, forcing CPPs to curtail generation or come to a standstill. On an average, Captive Power Plant-based industries are getting less than 50% of the Coal against secured linkages and CIL auctions. Importantly, curtailment to CPP is continuing despite Power Sector having come out of the coal crisis.

With the coordinated efforts of all ministries, the situation for State Power Sector has improved to current levels of 10 days. However, the CPP industry consumers are still getting overall coal supplies at just 40% to 50% levels leaving them struggling to get uninterrupted coal supplies for continued operations. Also, the Coal -Rake dispatch is at a much lower levels than their requirement booked through linkage and auctions.

The Aluminium industry operations are one of the most severely impacted with the price being on a rise recently due to the global shortage. With the coal crisis impacting the industry, the scarcity will lead to further increase in rates. Being a metal of strategic importance, the country cannot afford the shock of Aluminium shortage.

Any power outage in Aluminium plants will lead to catastrophic impact & complete shutdown which will take minimum 12 Months of recovery, resulting in job loss of more than 8 lakh people. Banks will have debt exposure of over Rs.1 Lakh Crores and additional National forex loss of Rs. 90,000 Crs. (~$ 12 billion). Aluminium production is a 24x7, 365 days continuous process industry which is highly power intensive. To meet stringent & continuous Power demand the industry has set up their inhouse Captive Power Plant CPPs of ~ 9,400 MW (9.4 GW i.e., 34% of Thermal CPP capacity of the country) with an investment of ~ Rs. 50,000 Crs. The industry can only meet its power requirement through CPPs for which it requires 1.5 Lakh Tons of domestic Coal daily (~ 55 million Tons every year). To meet the extensive Coal demand, the industry has set up plants in the vicinity of Coal bearing areas, with Power plants designed to operate on domestic Coal.

Therefore, it is critical to maintain continuous Coal supplies to the Aluminium sector for production of captive power as any shortfall will jeopardize investments of Rs. 1.4 Lakh Crore including debt of Rs. 1 Lakh Crores. This shall also cause shortage of raw material to key industries leading to increase in Aluminium import & loss of export earnings, having an impact of ~$ 10 Bn per annum (~Rs. 70,000 Crs. every year).

Keeping the above in mind, The Indian Captive Power Producers Association has requested the ministry’s immediate intervention for normalizing 100% Coal rakes supplies to CPP industry and help them to partner the economic development of the nation.

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