Coal-based power plants have had a horrible three weeks with several of them reeling under an acute shortage of fuel.While the situation remains grim, the refrain is things are improving.

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Of the 86 coal-fired projects monitored by the government on a daily basis, 29 are making do with fuel for less than four days and 44 with less than seven days’ stock, said Abhishek Tyagi and Rajesh Panjwani, analysts with CLSA Asia Pacific Markets, in a note on Monday.

The norm is to ensure fuel supply for about a month.Nearly 55% of India’s installed power capacity of over 180,000 mw is coal-fired.

State-owned Coal India (CIL), the country’s largest coal producer, has been beset by a host of issues like heavy rainfall, the Telangana agitation and poor workers’ attendance during the festive season.

Last week the coal ministry directed CIL to divert 4 million tonne (mt) from e-auctions to state-owned power plants.A Coal India official claimed production and consequent supplies have improved since October 11. Tyagi and Panjwani called it an interim measure given the “precarious situation of the power plants” and added, “there is no policy decision yet forthcoming which addresses the coal production/shortage problems more holistically.”

CIL said the scenario has been better over the last few days.“Daily coal production has now crossed 1 mt from October 11 against an average of 0.7 mt in the first week,” the CIL official said.CIL’s output has improved since October 11, going from 1.10 mt on last Tuesday to 1.14 mt on Saturday before dipping slightly to 1.10 mt on Sunday, a day when attendance at mines is usually low. CIL’s production between July and September was 81 mt, 8% lower than last year.

NTPC, the country’s largest private power producer with over 34,000 mw of operational capacity, has been the worst-hit. While India’s thermal power generation was up 5.5% year on year in April-September, NTPC saw a 2.3% decline.

Last week, NTPC had to draw coal from various sources for its 2,600 mw plant at Ramagundam in Andhra Pradesh as workers of Singareni Collieries participated in the Telengana protests. At one point, NTPC had only enough coal for 1,500 mw. But an NTPC official said now nearly 96% of its coal requirements are met. “We need to get coal for only 200-300 mw,” he noted.

Power developers who have their own captive mines are better off than those dependent on state-owned coal producers — like Kolkata-based CESC.

Meanwhile, merchant power tariffs have spiked, giving developers a shot in the arm. L Madhusudhan Rao, chairman, Lanco Infratech, said the rate per unit in the merchant market has almost doubled from `3.5 to `6.7 in the last one month. But, this could be just a temporary gain for power producers.

“We also expect that merchant power plays would find increasingly difficult to source domestic coal and gas given the recent policy decisions to prioritise projects operating on regulated business models for fuel allocation,” Tyagi and Panjwani said in the report.