{"id":141054,"date":"2021-10-13T19:54:03","date_gmt":"2021-10-13T14:24:03","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=141054"},"modified":"2021-10-20T14:05:04","modified_gmt":"2021-10-20T08:35:04","slug":"power-ministry-asks-thermal-units-to-import-coal-for-minimum-10-blending","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/power-ministry-asks-thermal-units-to-import-coal-for-minimum-10-blending\/","title":{"rendered":"Power Ministry asks thermal units to import coal for minimum 10% blending"},"content":{"rendered":"\n

Synopsis<\/strong>: The present problems in the coal sector need a long-term solution to avoid such issues in future.<\/p>\n

Introduction<\/h5>\n

To meet the increased power demand in the\u00a0country, the\u00a0Centre has asked thermal power generators to<\/span>\u00a0import coal\u00a0<\/span><\/b>for at least<\/span>\u00a0<\/span><\/b>10% blending<\/span>,<\/span><\/b> citing a shortage of domestic coal supply. This is a sharp reversal of its earlier directive of using domestic coal.<\/span>\u00a0<\/span><\/p>\n

Note<\/strong>: The Centre in 2017-18 had tried for zero coal imports, but it led to a shortage, compelling thermal units to resume the import of coal later.<\/p>\n

Why the government permitted imports?<\/span><\/b>\u00a0<\/span><\/h5>\n
\"Coal
Source: Business Standard<\/figcaption><\/figure>\n

The share of coal-based generation increased from 62% in 2019 to 66% in the August-September period. <\/span>\u00a0<\/span>Total coal consumption during the same period increased 18% over the corresponding period in 2019.<\/span>\u00a0<\/span><\/p>\n

Currently, 16.8 gigawatt (GW) of power generation capacity has zero days of coal stock and 25 GW has less than three days of coal.<\/span> So, the government decided to permit imports.<\/span><\/p>\n

What is the reason for the mismatch in demand and supply of power?<\/span><\/b>\u00a0<\/span><\/h5>\n

Increased demand<\/span><\/b>-As per the power ministry, the revival of the economy had led to an increase in demand and consumption of electricity.<\/span>\u00a0<\/span><\/p>\n

Inadequate supply<\/span><\/b>– supply from Coal India is not commensurate with the requirement.<\/span>\u00a0<\/span><\/p>\n

The Centre mentioned that some states are not supplying power to consumers and imposing load-shedding in some areas. On the other hand, several states <\/span>were <\/span>selling unallocated power<\/strong> from central generating stations on power exchanges “<\/span>at a high price<\/strong>“.<\/span><\/p>\n

Panic buying<\/strong>: With coal supply and electricity shortage looming, several power distribution companies are panic buying on the power spot market.<\/span><\/p>\n

The issue of \u201cPower purchase agreements\u201d<\/strong>: PPA is a legal and commercial document between a power producer as seller and the wholesale energy purchaser like the state electricity boards, as a buyer.<\/span> Under this, the producer will agree<\/span> to produce and deliver power to specified users for a fixed price.<\/p>\n

The PPA\u2019s mandates power not to be sold on exchanges<\/strong> and also that it usually runs for around 15-20 years, the sudden eventuality is not taken care of, hurting the producer of electricity.<\/span>\u00a0<\/span><\/p>\n

Imported coal-based plants argued that it was absolutely \u2018unviable to’ have a fixed-price agreement.<\/p>\n\n\n\n
Read more<\/strong>: Coal crisis in India \u2013 Explained, pointwise<\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n
What is the government target with regard to coal import?<\/span><\/b>\u00a0<\/span><\/h5>\n

As part of the \u2018Aatmanirbhar\u00a0Bharat initiative\u2019, the government decided to reduce the import of coal. Union Minister for Coal said India would have<\/span>\u00a0zero coal imports by 2023-24<\/span><\/b>\u00a0<\/span><\/p>\n

What can be done to improve the situation?<\/strong><\/h5>\n

India can permit supplying the power through power exchanges<\/strong> so that whenever there are such fluctuations in the market, the generators have the flexibility.<\/p>\n

India can follow steps like China<\/strong>. Recently, China announced a major policy change for its crisis-ridden power sector by allowing coal-fired power plants to charge their industrial and commercial customers\u00a0<\/span>market-driven prices<\/span><\/b>.<\/span><\/b> This is being done to pass on the high costs of coal to the users. India can also permit such bold moves.\u00a0<\/span><\/p>\n

Source<\/span><\/b>: This post is based on the following articles <\/span><\/p>\n