With no respite from the severe coal shortage faced by several units, eight industry associations representing fertilizer, paper, textile, aluminium, sponge iron and other sectors, have made a joint representation to Prime Minister Narendra Modi for urgent intervention.
In a letter, dated February 7, the trade bodies have stressed that the persisting coal crisis has been hurting the overall industry, especially the power-intensive plants and SMEs, forcing them to operate at reduced capacities with a looming risk of plant closures.
It also argued that at a time when Coal India Limited’s (CIL’s) production level has increased by 7% month-on-month, there is no rationale behind ‘such abysmal scare supply’ to the industries that is impeding the growth of the manufacturing sector.
The representation has been jointly submitted by Coal Consumers’ Association of India, Confederation of Indian Textile Industry, Indian Captive Power Producers Association, UP Paper Mill Power Plant Owners Association, Aluminium Association of India, Sponge Iron Manufacturers Association, Fertiliser Association of India, and Vidarbha Industries Association.
The trade associations have demanded that the standard policy of the Ministry of Coal must be strongly implemented to ensure adequate coal supply to both power and non-power sectors.
It added that the substantial curtailment in coal supply via rail and road modes in recent weeks has pushed NPS (non-power sector) coal consumers to the extent of severely catastrophic conditions. The coal requirement of non-regulated sub-sectors is about 25-30% of the total coal production and requires about 5 lakh tonnes of coal daily for sustainable operations. However, they have been receiving less than 3 lakh tonnes of coal every day. Additionally, there is a huge pendency of rakes (4000 rakes) for the non-power sector from most of Coal India Limited (CIL) subsidiaries.
“Till date there is no official communication from CIL regarding the possible duration of supply crunch in spite of such ongoing adversities. This is creating an environment of panic and uncertainty as these industries are unable to ascertain the magnitude of the crisis and plan for the future,” the letter said.
The letter further added that lack of rake movement in Linkage Auction, Exclusive and Spot e-auction routes has caused many industries to depend on coal supply through roads which is neither adequate nor financially viable. In addition, the high cost of imported coal coupled with high ocean freight rate means that a large number of industrial units simply cannot afford to take that route and have to depend on indigenous coal. Industries with integrated captive power plants (CPPs) are not able to fulfil their power requirement entirely from the grid, because of the basic design of the transmission and distribution system, it added.
The trade bodies highlighted that the adverse supply situation that started around August/ September last year showed signs of improvement during November’21. However, coal supply to the NRS consumers including CPPs have plummeted once again despite October-March being the highest production months for CIL.