A nation into election mode at a time of rising temperature might put pressure on power generating companies as coal output has risen by just 1% and supplies by 2.6% in April.
Coal India’s production has gone up 1% to 45.29 million tonne (mt) in the month when peak power demand touched 9%.
The dominant coal miner’s supplies have remained muted since the beginning of 2019, growing at just 4.8% during the period with April figures touching recent lows.
This, however, hasn’t triggered a power crisis so far because of low power demand till March.
“(Offtake remaining flat) is largely driven by muted power demand over January-March period coupled with improved coal stocks at power plants for 18 days in April against seven days’ stock in October,” a research report by JM Financial said.
But since the beginning of the Election process on April 11 -- spread over seven phases to be concluded only on May 23 -- power demand has spiked up.
Peak demand met reached a new high of 176.8 gigawatt in April, registering 9% increase over peak demand met of 162 gw in the corresponding month of 2018 as per the National Load Despatch Centre data.
On all India basis, the energy met in April at 112 Billion Units registered a 7% increase over 105 BU in April of 2018.
“The increase in traded volume over the previous month was mainly due to increase in demand for power across states in the context of increasing temperature as well as the ongoing Lok-Sabha elections,” Indian Energy Exchange said in its power trading market update for April.
Supplies by Coal India went up by 2.6% to 52.35 mt during April as compared with 51.02 mt in the year-ago period.
Coal India’s production at the start of the year compares poorly with its production for the whole of last fiscal.
During FY19, the country’s near-monopoly miner saw 7% growth in output at 607 mt almost reaching its target of 610 mt.
Supplies to the power sector went up 7% to 488 mt, keeping pace with power generation which also went up by 7%.
Like this year, the onset of summer of 2018 saw a surge in demand for electricity from April, which coincided with the rise in global coal prices leading to a shortage of coal at thermal power plants, forcing Coal India to go for out of turn coal allotment to state and central PSU generation companies at the cost of sectors like cement, steel, aluminium and others.
Failure to keep pace with power demand may force Coal India to resort to similar diversion strategy in FY20 also.
Despite low production, a power crisis may be averted as stocks both with Coal India as well as power plants are utilised well.
“In the summer season, coal production usually slows down. There are reserves with coal mines and many (mining) projects are there.
“We need to factor these before we conclude anything,” Ashok Khurana, director general, Association of Power Producers told DNA Money.
In a sign of rising power demand, imports by power plants have already started rising.
POLL CURRENT
- 176.8 gigawatt – peak demand met reached a new high in April, 9% YoY jump
- 112 bn units – energy demand met in April, a rise of 7% over the year-ago period
SUPPLIES
- 2.6% – year-on-year jump in supplies to 52.35 mt during April over a year ago
- 7% – jump in CIL’s output during last fiscal at 607 mt
- 7% – rise in supplies to the power sector, which saw demand grow in tandemat 7%
- 19.2 mt – coal imports in April, the highest since June 2016
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