New math for power plant coal stocks

As power plants across the country complain about a coal shortage, the Central Electricity Authority (CEA) has overhauled the methodology to calculate coal stocks and the level at which a plant can be declared critical. 

The CEA plans to streamline data for demand and performance of state power utilities and power plants along with coal and railway rake availability.

The CEA is the technical arm of the power ministry and tabulates daily data of coal stocks at power plants. During the last two months, the average coal stock at power plants across India has dwindled to six days. The low availability of railways rakes has aggravated the problem. There have also been allegations of diversion of railway rakes.

In the new methodology being drafted by the CEA, coal stocks of a state will be aggregated and supply to plants will be made accordingly. “The state or central power utility will submit a monthly coal programme matrix as their aggregated ACQ (annual contracted quantity) to the coal company one month in advance. The coal company after due diligence and considering infrastructure constraints should approve the coal programme matrix,” said the CEA’s paper on the methodology. It added that the supply could be less than demand due to “infrastructure constraints”, which would be communicated to the power utility.

The CEA will also monitor the seven-day performance of the utility to understand its coal consumption. Rakes will be allocated accordingly by communicating the demand to the railways. Power ministry officials said the change was in line with the new policy allowing flexibility to power generating stations in utilisation of domestic coal.

In the new policy, which was announced in May 2016, the coal requirement of a state will be clubbed and assigned to the respective state or its nominated agency. The state will then award coal linkage to the power plants in its territory according to need, efficiency and the cost of power. In the case of state or central power plants, the criteria will be plant efficiency, coal transportation cost, transmission charges and the overall cost of power.

“The only change this brings in is that the coal quantity will not be allotted plant-wise but utility-wise. The measurements for coal supply will be according to the demand of the state. The states have the right to allocate the coal to units in their region,” said an official. Till now, the CEA calculates stocks on the basis of despatches from CIL mines to meet the annual contracted quantity of a power plant. The data enlists what per cent of the annual contracted quantity is being met. For pit-head stations near coal mines 15 days of stocks and for units not near coal mines 25-30 days of stocks are to be maintained. A plant is declared critical when its stock is less than 5-7 days and supercritical when it is less than 3-4 days. Now the CEA has said 28 days of stocks have to be available with power plants.

“The new methodology brings in clarity, reflects the updated policy environment. It anticipates and outlines various scenarios of monitoring stocks. It was much needed,” said Sambitosh Mahapatra, partner, power and utilities, at PwC India.

The thermal power industry, however, is not too sure about the change. Industry executives said the new method would not reveal the true coal supply situation at the plant level. 

“The proposed methodology, limiting itself to the quantity of coal supply under linkage, will not reflect the ground realities of criticality at plants,” said AK Khurana, director-general of the Association of Power Producers (APP), the representative association of privately-owned thermal power producers.

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